Читать книгу Investing in Bonds For Dummies - Russell Wild - Страница 8

One of the big questions about bond investing that I help you to answer later in this book is whether to invest in individual bonds or bond funds.

I generally advocate bond funds – both bond mutual funds and exchange-traded funds. Mutual funds and exchange-traded funds represent baskets of securities (usually stocks or bonds, or sometimes both) and allow for instant and easy portfolio diversification. You do, however, need to be careful about which funds you choose. Not all are created equal – far, far from it.

I outline the pros and cons of owning individual bonds versus bond funds in Chapter 11. Here, I give you a very quick sneak preview of that discussion.

Picking and choosing individual bonds

Individual bonds offer investors the opportunity to really fine-tune a fixed-income portfolio. With individual bonds, you can choose exactly what you want in terms of bond quality, maturity, and taxability.

For larger investors – especially those who do their homework – investing in individual bonds may also be more economical than investing in a bond fund. That’s especially true for investors who are up on the latest advances in bond buying and selling.

Once upon a time, any buyers or sellers of individual bonds had to take a giant leap of faith that their bond broker wasn’t trimming too much meat off the bone. No more. In Chapter 4, I show you how to find out exactly how much your bond broker is making off you – or trying to make off you. I show you how to compare comparable bonds to get the best deals. And I discuss some popular bond strategies, including the most popular and potent one, laddering your bonds, which means staggering the maturities of the bonds that you buy.

Going with a bond fund or funds

Investors now have a choice of well over 5,000 bond mutual funds or exchange-traded funds. All have the same basic drawbacks: management expenses and a certain degree of unpredictability above and beyond individual bonds. But even so, some make for very good potential investments, particularly for people with modest portfolios.

Where to begin your fund search? I promise to help you weed out the losers and pick the very best. As you’ll discover (or as you know already if you have read my Exchange-Traded Funds For Dummies), I’m a strong proponent of buying index funds – mutual funds or exchange-traded funds that seek to provide exposure to an entire asset class (such as bonds or stocks) with very little trading and very low expenses. I believe that such funds are the way to go for most investors to get the bond exposure they need. I suggest some good bond index funds, as well as other bond funds, in Chapter 5.