🔒Открыть пост
и посмотреть медиа
и посмотреть медиа
The timing mismatch of coupons
Compound interest works best when interest is calculated continuously. In bonds, coupons are paid discretely — quarterly, semi-annually, or annually.
Money received from a coupon sits "dead" until the moment of buying the next bond. This downtime reduces the portfolio's actual internal rate of return (IRR) compared to a bank deposit, where capitalization can be monthly. The less frequent the coupon payments, the lower the actual efficiency of your compound interest.
Infrequent coupon payments slow down your capital growth.
#strategy #income