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pigking2008(铜头猪王), thanks a lot for your reply. I put this new post 'cause it got too long with the old post. Further discussion of corporate bond: Comparing to individual stock,

happy2001(simplelife)

I thought corporate bond is less risky because the final payer at due date is the company itself, as long as it's not bankrupted by that time, my principle is safe and will be paid back, even though the bond price itself could be siginificantly dropped before the due date. For stock, it's much more volatile and we need to stop loss to limit the loss. Basically what I want to say is that I don't have to sell bond with loss as long as I trusted the company will EXIST by due date even when the company stock drops to a very low value. Am I wrong???

(#32787@43)
Last Updated: 2008-4-29

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pigking2008(铜头猪王), thanks a lot for your reply. I put this new post 'cause it got too long with the old post. Further discussion of corporate bond: Comparing to individual stock, -happy2001(simplelife); 2008-4-29 {553} (#32787@43)
I thought corporate bond is less risky because the final payer at due date is the company itself, as long as it's not bankrupted by that time, my principle is safe and will be paid back, even though the bond price itself could be siginificantly dropped before the due date. For stock, it's much more volatile and we need to stop loss to limit the loss. Basically what I want to say is that I don't have to sell bond with loss as long as I trusted the company will EXIST by due date even when the company stock drops to a very low value. Am I wrong???

Yes, but the gains are also limited. Risks should always be considered together with the relative gains. My point is just this: It's not worth it for amateur investors to invest in individual corporate bonds. -pigking2008(铜头猪王 - 我不回PM); 2008-4-29 {576} (#32789@43)
1. Portfolio 1:
20% Corporate Bonds
80% Stocks

2. Portfolio 2
15% Government Bonds
85% Stocks

Most probably these 2 portfolio will have almost the same long-term return, but the latter one will be less volatile. As an asset class, I don't like corporate bond funds(Let alone individual corporate bonds).

The recent default rate of corporate bonds are relatively low(2-3%?), but you get what you pay for. The spread between the coupon of government & corporate bonds is also small.

My last post.... You need to really understand how to diversify a portfolio.

Thanks you very much for your detail reply. -happy2001(simplelife); 2008-4-29 (#32803@43)

pigking2008(铜头猪王), thanks a lot for your reply. I put this new post 'cause it got too long with the old post. Further discussion of corporate bond: Comparing to individual stock,

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