Post #225 by knighttof3 on the Index Investing board

Investment Strategies / Index Investing

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Getting say 6% for a ten year might seem appealing. But if inflation really ticks up, then a nominal return of 6% could end up as a real return of say 2%, or worse.

This and similar post by rayvt shows a slight misunderstanding of why people hold bonds.

Simply put, not for the returns but for the stability. Same reason why ships carry the "dead weight" of ballast.

Not everyone has a 10-15-20 year horizon for every investment. Sometimes, preservation of capital and a tightly capped drawdown is more important than potential returns.

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