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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Investment Strategies / Index Investing
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Author: tedthedog   😊 😞
Number: of 291 
Subject: Re: Bonds
Date: 08/21/25 4:01 PM
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Government bonds held directly are safer than a fund holding different types of 'obligations'. AFAIK, T-bills are also not subject to state tax, which is attractive. But unless your cash is under the mattress, the tax hit of liquidating a current 'safe' position and buying t-bills would be substantial. The 'savings' from the state tax would take a very long time to pay that hit off.
BTW, Schwab will roll T-bills for you automatically. Maybe other brokerages do.

Corporate bonds, particularly bond funds, are problematic.
Consider the ETF 'AGG' which tracks the total U.S.investment-grade bond market.
Here's the nominal (not inflation adjusted) and 'real' (inflation adjusted) CAGRs of AGG from 2003-09-29 through 2025-08-20 (yahoo data):

AGG:
Nominal Annualized Return 2.44%
Real Annualized Return -0.29%

You'd lose money in real terms, and eke out a slight positive return in nominal terms if you held AGG over this period.

Individual bonds held to maturity in a great company might sound good. 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. Default is the assumed risk. The U.S. president is reorganizing world economic order and the U.S. economy. Who knows what will happen, good or bad?

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