4 ms·
It can, it just depends. Take these hypothetical scenarios for example: Scenario 1: Buy 10Y today, @4.5% interest. Scenario 2: Hold that money as cash for 5 y
by Rury 3y ago
It can, it just depends. Take these hypothetical scenarios for example:
Scenario 1: Buy 10Y today, @4.5% interest.
Scenario 2: Hold that money as cash for 5 years, and then use it to buy 5Y when it's yielding 17% interest.
Scenario 2 will yield a greater ROI after the 10 years. Obviously, there's no way of knowing exactly what the future will hold (many other scenarios are also possible). It just all depends.
- xyzzy123 3y agoPerhaps the misconception is the idea that you could buy 10Y now and then sell them later for the same value if a better rate comes along, i.e, mistaking 10Y bonds for "cash" and not realising they can drop in value.