OK. No hurry. I won't be visiting my broker till next week. My best bets in the last ten years have been Ginny Mae (5%) and Russian Bank Bonds. (Alpha Bank, 8% returns.)
Joanna ----- Original Message ----- Joanna: > Excuse the ignorant question: what's the difference between the Treasury Bond > Index return > and just buying bonds and holding to maturity? This is what is confusing to many. There is no difference between buying an equity index such as S&P500 and a bond index. Any bond index is also a portfolio of things, just as the S&P500 is a portfolio of things. The dividends paid on the equity indexes and the coupons paid on the bond indexes are the same things. Further, both are marked to market daily, meaning, they are repriced everyday based on the market prices, if there are any. Otherwise, bond indexes are marked to model, or to fantasy, as some say. But, no matter what, the price of the bond index portfolio changes daily. Furthermore, a bond index portfolio composition changes from time to time. For example, the Barclay's Long Term Treasury Index is not a static portfolio, since the US Treasury sells long term bonds regularly, and seasoned long term bond become not so long term after some years, supposing that what is meant by long term is 10 years or longer. These are what change the portfolio composition, among other things. If you buy a bond to hold to maturity, all you get is the coupon payments, if your bond is 2 years or longer maturity in the US, and then the principal at maturity. There is no marking to market or fantasy if you are holding the bond to maturity, supposing that the bond is default-free. Boy, this is getting complicated. Let me think about this to simplify the answer. But, until I find an answer, you should erase from your mind the concept of the yield. The so-called yield of a bond has nothing to do with the return of a bond. The yield is an archaic concept that has to be put into the dustbin of history given what is going on in these days. Best, Sabri _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
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