CHAPTER 19

Financial Planning Framework for Bond Investing

There are two times in a man’s life when he should not speculate: When he can’t afford it, and when he can.

—Mark Twain

Like Rodney Dangerfield, bonds get no respect. Their advantages of predictable growth and cash flow are woefully underappreciated. We believe that plain vanilla bonds have proven themselves to be the best investments available, and we wholeheartedly agree with Andrew Mellon’s prescient late-1920s observation that “gentlemen prefer bonds.” We believe that ladies should, too.

Mellon’s statement was memorable, although a bit too pithy. Bonds are an extremely diverse financial category. They come in all denominations and maturities, from ultra-safe Treasury bills to risky ...

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