I have some of my RA's in Bonds, and I am thinking of putting all of the rest into income funds. Everywhere I read is saying that bond funds are going to go down. I don't understand. If interest rates go up, surely that is good for the bond fund? Experts say the yields will go down - why?
In simple terms: A traditional bond's interest rate is fixed at the time of issue. As interest rates rise, the bond becomes less attractive relative to say money market (or to new bonds that will be issued at a higher inwerest rate). This usually results in the bond capital value reducing such that the % return on the lower capital value more or less stays equal to other available returns of similar risk. Just like the equity market, the bond market can be pricing in changes expected for 1+ years. You may want to go with inflation linked bonds.
The reason free advice is free is because its no good(Michael Caine) I read your posting with a mixture of fear and trepidation. Get your overall asset allocation appropriate to the objectives you have set for yourself financially. I don't believe in luck. ( but here is some really GOOD advice - go and buy yourself a copy of John Kay's book - "the long and the short of it"
Dear John Its not about "expensive" its about "priced for the service rendered". You pay a plumber R250 an hour -don't you - or do you do it yourself - well if you do then there is no comeback if you end up gazing at Vic Falls. Paid for advice has at least a comeback option - unless its a man of straw you are daling with. Hence you should be prepared to pay for advice - especially on financial matters? If you gather tips at a barbeque you have to know that as you paid nothing you have probably got nothing. In fact this is the closest you will get to the two messengers discussing the market in the lift. That said - my advice to folk is to be very careful if you work in the financial World about what you say at braai's - especially if someone then acts on your "advice"..... Anyway this is bordering on free advice so if you haven't read it, read JOHN KAY's book - that's free but good advice!