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The long duration risk
The longer the maturity of a bond, the more it reacts to changes in the key rate. By buying long-term securities during a period of tightening monetary policy, you risk locking capital for a long time in a depreciating asset.
Deposits allow you to reinvest at a higher interest rate every 3–6 months. Bonds lose out in this case, as their market value will take time to recover, while the yield remains fixed.
Long duration is not yield; it is market risk.
Always assess whether you are willing to wait until maturity if the market turns against you.
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