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  • hank November 2019
Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Fixed income is still a mystery to many investors

Fixed income is still a mystery to many investors

https://www.investmentnews.com/article/20191028/BLOG09/191029935/fixed-income-is-still-a-mystery-to-many-investors

survey shows many Americans admit to having little knowledge about various fixed-income securities and how to invest in them

Comments

  • edited November 2019
    “Here's a rundown of those who answered "I do not understand it at all" with regard to the following types of bonds: Treasuries, 39%; municipal bonds, 45%; high-yield bonds, 46%; corporate bonds, 51%; structured products, 53%; Treasury Inflation Protected Securities, 63%. Of the 849 respondents who don't own fixed income or don't have any investment portfolio, 44% said they don't buy bonds because they don't understand the different types of securities.”

    I’m a bit unsure of just who comprised the sample group. Assuming it was a random cross-section of the adult population, I’m not surprised at the results. First, many can’t afford to pay the rent - let alone invest. But a good many who own solid mutual funds, perhaps on the advice of a friend, advisor or employer, might not understand the intricacies of the bond market. So much depends on your life experience and amount of time you’ve spent reading or talking about a subject.

    I suppose I could conduct a survey of some common fishing terms like: “down-rigger”, “high-lining”, “slip-sinker” or “cow-bells” and get a similar low percentage of respondents who knew what they were. But, if you grew up in a Great Lakes costal town and fished a little or knew people who did those are all very common and well understood terms.

    From another perspective, I really don’t understand the bond markets. When folks are willing to invest in bonds yielding only 1 or 2 percent - or even in some cases, in bonds that are guaranteed to pay you back less than you invested .... it really does escape my feeble understanding.

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