Assuming you're goal is to get income.... It seems to me right now preferred stocks are offering much better risk-adjusted yields than bonds of the same credit-worthiness. Preferreds are a step down from bonds if the company gets into financial difficulties. But they are a step up from dividend paying common shares, in that the preferred dividends must be paid first before the common shares. There are some funds that hold preferred shares only, and spread out your risk. The one I own is PFF (maybe its PPF??), last time I looked it was yielding over 6%. I suspect a collection of bonds from those same companies that are in PFF would be yielding much less. But maybe I'm wrong. Someone else can do the math. You can also sell call options against the shares of PFF that you own, for additional income. I only own one individual preferred, issued by NLY, been paying me a very nice dividend since 2004. As far as grandkids, or kids if you got going on that very late in life....they don't need to have a W-2 in order to have a Roth IRA. If you grandchild is 12, 13, 14, and maybe made $500 raking leaves, etc...you can always get them set up with a Roth IRA. You probably don't want to say your two-year old made $6,000 plowing driveways last winter. Brokers like Schwab may have some incentive in directing clients to specific mutual funds through sales charges...aren't they called 12-b charges, or something like that??
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