Everyone says not to buy bonds now because interest rates will rise. I'm wondering how dollar cost averaging (and reinvesting returns) helps reduce the risk.
I'm not sure how bond funds work in general. If I invest X each month, where does X go - an existing (low yield) bond, or a new bond (at the current interest rate)? Does that just depend on what the fund manager is doing at the time (buying/selling)?
If I put Y into a fund, and leave it there for 50 years, where does Y go when all of the bonds at the time I made the purchase mature? Does Y just get reinvested in new bonds at the interest rate at that time?