Sunday, June 28, 2009

Bonds Versus Property

Depending on your capital, you might want to consider treating physical property as an alternative to bonds instead.

I am of the view that bonds if bought under par will give you upside limited to the discount you bought it at, unless interest rate continues dropping which is unlikely.

However, properties bought below par or even at par can have unlimited appreciation and can be held for the long term (99-999yrs).

Both will give you fixed income streams but the distinctive advantage of property is that you control it and will ultimately owned it and it will generate recurrent income stream for the duration of its tenure.

Further, Bonds is not a good hedge against inflation but property will be. And we are right now at the tip of a new secular trend of a bond bear market due to the expansion of monetary supply and interest rate rise.

For myself, I will not buy any more bonds and will instead direct the money into properties and equities.

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