I'm relatively young, and have my money diversified between small and large caps, and value and growth funds. But now I want to start putting a little money into bonds as well. I think a bond mutual fund makes the most sense, one that is quite diversified in the bond market, so that I can get broad exposure to bonds in one purchase. Are bond index funds best for this? Regardless, I'd love to hear some Fools' favorites for me to consider.Thanks..
I think a bond mutual fund makes the most sense, one that is quite diversified in the bond market, so that I can get broad exposure to bonds in one purchase.I'd suggest that you take a look at Vanguard Total Bond Market Index Fund, VBMFX. This might suit your needs.http://majestic5.vanguard.com/FP/DA/0.1.vgi_FProfileSnapshot/246200177130050431?FUND_ID=0084&ChtDspAvgAnnlRtns=Tauslander
Yes, a bond mutual fund is probably a good way to begin--until your investment gets to about $25K in bonds. For larger amounts you can consider owning the bonds themselves instead of a mutual fund.I think you may be over emphasizing diversification. With investment grade corporate bonds, almost any bond fund will be highly diversified. You should be more concerned about bond rating and maturities. Will you accept long bonds? Do you want short bonds? Or something in between?Investment grade bonds (those rated BBB or better) are usually fairly conservative investments. Junk bonds (those rated BB or lower) are more risky. If you decide to invest in junk bonds, then diversification becomes more important.You'll find more on bond investing in the links from message 218 on this board, but also check out the Fool school from the fool.com homepage.
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