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When you buy the bonds directly, you're choosing an explicit exit date and you know exactly what your return will be.

When you buy a bond fund, your principal is going to be reinvested, so there's a risk of interest rates going up right before you sell.

Some firms offer target maturity bond funds which will is the best of both worlds.

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Liability matching is strictly more optimal. If you know when you need money you can take that portion of the risk out of the equation. On the other hand, with reinvested funds, you are paid to take the risk of interest rates going up and the lack of a fixed maturity date, by the possibility that interest rates might go down (the so-called roll-yield).

> Some firms offer target maturity bond funds which will is the best of both worlds.

These are great for corporate bonds. Check out iShares iBonds if you want to include corporate bonds in your portfolio without building a ladder or taking on interest rate risk.

You don't want to include corporate bonds in your portfolio. Generally speaking, buying equities gets you a better price for the risk you take; a slightly higher equity percentage with government-backed bonds will generally outperform at the same level of risk.

Is there a good link to learn more about that?

Not that I can easily find or remember.

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