Why bonds are worth the risk

Share dividend returns can be higher than bonds, but the higher risk of equities doesn’t always pay off.

PORTFOLIO POINT: While equity investors can get higher real returns than bondholders, bond payments guarantee a fixed income stream while dividends can always be cut.

Alan Kohler asked a great question at the recent Eureka Congress: “What’s the difference between a bank paying a 7% dividend and a 7% bond coupon?”

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