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Optimal bond duration

·1 min

How do you pick the right bonds? (Assuming my understanding from random internet forums is accurate) One important aspect is: match bond duration with your investment horizon. For e.g., if you want to invest for the long term (say, 20-30 years down the line), then pick bonds that have ultra-long duration.

Also, the duration of a bond fund will remain the same even if your investment horizon changes. (If, let’s say, you reach retirement.) In those cases, you may need to modify the proportion of multiple bond funds to get the desired real duration.