newbiz wrote:I have met with

[permabear]

[quote=newbiz]I have met with two financial advisors, one of whom suggested a intermediatry bond portfolio and the other one screamed bloody murder when I mentioned Intermediatry bonds. (around 5 year maturity)[/quote]

What did the “bloody murder” guy offer as an alternative? He may be the smarter of the two, depending on what he said.

There is some evidence that the debt bubble has moved from housing to the bond market. Bond funds are NOT a sure thing – it is possible to lose lots of money in a bond fund. This happened in the 70’s when inflation hit, and bond funds lost 30-40%. As interest rates rise, lower interest bonds lose their premiums, so the usual techniques that bond funds use (rolling over bonds into newer issues) results in loss of principal.

http://www.fool.com/retirement/general/2010/04/27/dont-let-your-bond-fund-bite-you.aspx

I would be as careful investing in a bond fund as a mutual fund. Make sure you understand interest rate risk.

http://www.sec.gov/answers/bondfunds.htm

“Because of this type of risk, you can lose money in a bond fund, including those that invest only in insured bonds or U.S. Government bonds.”