I previously wrote that bonds are more suitable for cash flow than stock dividends. This is because coupon payments from bonds are fixed while dividends from stocks are not. Bondholders are higher on the hierarchy of claims than shareholders and hence bonds are considered less risky than stocks.
Why are most investors clueless about bonds?
MoolahSense founder, Lawrence Yong, shared with us during the interview that retail investors do not have access to many bonds. Many of them were only sold to wealthy investors! He was speaking from his previous work experience as a fixed income banker.
Most of these bonds are paying decent yields and are snapped up by institutions and wealth banking clients. Currently, there are only 6 corporate bonds traded on SGX, and an another one adding to the list soon (Frasers Centrepoint Trust is issuing bonds of interest 3.65%).
We have encountered a handful of retirees in our talks …