Irony of fixed income

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Generally you'll want to invest in a portfolio that generates a rate of return greater than inflation rate. Let's called this the desired rate. Investing wholly in bonds generally would not be sufficient to do that.

Those who can invest a lot in riskier assets are those who are wealthy and yet ironically it's sufficient for them to jus invest solely in safer assets. For example, someone with RM 10 million placed in, say, fixed deposite with interest rate of 3% p.a. would earn interest of RM 300k a year, which translates into RM 25k each month and that is more than enough to live very comfortably.

Those who are not rich would understandably be worried about losing their capital and shy away from riskier assets but putting their savings into fixed deposit is not ideal either it doesn't give the desired rate.

Here's another irony:

I came accross bond issued by the Victorian government (an Australian state) with coupon rate exceeding 5% p.a., which easily beat Malaysia inflation rate of just less than 2% p.a. Yet, one needs at least RM 50k to buy them in Malaysia and SGD 200k in Singapore.

There is another bond with coupon rate of more than 6% p.a., issued by ANZ bank but it's available only to Accredited Investor i.e. those with high amoutn of income, net worth or liquid assets.

Both would have been ideal for those who are risk averse and that likely include those who aren't wealthy. Yet, they cannot purchase these bonds. Guess what they can purchase without such onerous conditions? Shares. Riskeir assets. Funny, isn't it?

I supposed the requirement of Accredited Investor is there because bonds are less well understood than shares? *shrug*

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