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Author: lucky1108 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35930  
Subject: Bonds versus Bond Funds Date: 9/18/2002 3:41 PM
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Hi - my broker recently asked me to invest in Bonds. Not something I've done recently (maybe 15 years ago?).

I'm interested. I'm 'semi-retired' and the Stock Market may not be the primary place for me in the future. I may be 'semi-retired' for another 40 years. (Disabled, not yet 50.) I have a somewhat diversified portfolio of Stocks, Mutuals, CDs, and Bond Funds. But no individual Bonds.

Then I read an article 'Bonds or Bond Funds?' which seemed to say, do both. Although I personally came to the conclusion that Bond Funds may involve less risk than individual bonds. (Broker wanted to sell me Ford Motor Bonds, BBB+, right after I read an article about Ford on Shaky Ground.) And a comparable or greater return? (6.35% Ford, vs what I have made last 6 months on funds mentioned below.)

I have Vanguard (Short Term Federal) and Strong (Government Securities) investments and their historical prices for the last six months. So I used Quicken and simulated investing $60,000 in Strong Government Securities 6 months ago, and drawing out $500 each month since.

My objective is to see if I can invest $60,000 into something and draw $500 per month without the investment dropping below $60,000. (I'm expecting a $60,000 windfall soon, and have a $400 per month shortfall, pension vs expenses.)

Without going to the extra step of figuring out what dividends would have been received each month and inputting them in Quicken, this seemed to work out. My Quicken simulated ending balance was actually about $61,000.

Being a novice at many investment things, I'm wondering if there are holes in my logic and approach.

I'd also like to get access to the historical prices for the last five years and go thru the exercise to that length. The last 6 months have been good to the Bond Funds. The late 1990s might paint a different picture?

Comments, PLEASE. I really want to thoroughly review this before trying it. I'm creative and think a lot, but not sure I'm not nuts.
When I want something to work, I might (consciously or subconsciously) ignore things which could keep it from working.
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