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Smart Bond Investing
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Bond Fact Investors held more than $1.7 trillion in taxable and municipal bond funds as of February 2008.
Source: Investment Company Institute |
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Bond Literacy
The number of individual investors purchasing bonds and bond funds has increased dramatically in recent years. But, how much does the average investor really know about bonds?
Our 2003 investor survey found a majority (71%) understood that when you buy a bond, you are in effect making a loan to a company or government entity. Most investors (84%) also correctly identified U.S. Treasury bonds as the safest type of bond. Dig deeper, however, and a bond literacy gap emerges.
Only about half (51%) of those surveyed knew what a junk bond was, and even fewer (40%) understood the critical relationship between bond prices and interest rates.
Understanding bond basics is critical to making informed investment decisions about this investment category. The more you know now, the less likely you will be to make a decision you later regret.
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