Quote:
Originally Posted by Slava
People know almost nothing about bonds and fixed income. I'm not convinced many advisors could construct a proper bond portfolio comprised of single securities, so to expect that people, in general, could do that is just hilarious. I know you know about these things, but people like you and me are not average in any respect.
Truthfully, bonds are way underappreciated as an investment, and that includes advisors. Most advisors do not buy single fixed-income securities, and I would guess that most never have. I would imagine that on platforms like Questrade, almost none of the transactions are bonds, save for the odd bond fund or ETF. I think those are the minority, though, and most people are purely trading stocks (and crypto, now).
This is a bit of a tangent, but we know that people's financial literacy is poor for the most part. And yet, we want to encourage people to manage their own money. Then we wonder why people are at retirement age with unrealistic expectations and insufficient money to support themselves.
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Oh for sure - that was tongue firmly planted in cheek. That comes from ggg's assertion that we should make people do their own taxes so they understand how stuff works. I agree with the sentiment there, but there's a line somewhere where expecting the average person to do something is totally ridiculous. Building a bond portfolio is over that line for the vast, vast majority of people.
I could do it if I wanted to (I definitely don't) but for the average person even if liquidity wasn't an issue (ie individual portfolio vs build an etf) trying to understand duration, convexity etc is just not a good use of time.
Way off topic now, but I agree with you about bonds. I've bought plenty of individual fixed income securities for various reasons, although never a properly diversified fixed income portfolio. I think some features of fixed income are underappreciated.