Role of corporate bonds in a portfolio

Tom99

[FONT=Verdana, sans-serif]You could hold individual corporate bonds, rather than cash, if you believe the extra interest you will get from the bond over a cash investment make up for the following:[/FONT]

• [FONT=Verdana, sans-serif]The bond may decline in value over the next few years a interest rates rise. If you intend to hold to maturity you don't need to bother with that risk.[/FONT]
• [FONT=Verdana, sans-serif]The small risk of non payment if you stick with investment grade bonds[/FONT]
• [FONT=Verdana, sans-serif]The trading cost of bonds to buy then sell and the fairly high buy/sell spread[/FONT]

[FONT=Verdana, sans-serif]To be honest the return on short term (2020-2025) investment grade bonds is very little above or even less that you might get with a fixed term cash deposit.[/FONT]

Thrugelmir

quanta wrote: »

Okay, I see the relevance to an income investor. Do they have a place for someone earlier in life seeking to accumulate?

Will provide a positive return to compensate other negatively performing elements of your portfolio. Greed can be an investors downfall.