No. of Recommendations: 0
Preferred stocks do make an attactive fixed income component of a portfolio. Yes, diversification is the key. And you will want to watch the bond rating.

Starting investors with under about $10K to invest might do very well in a preferred stock fund. A bond fund may also work just as well. But each of these has an expense ratio, which you will want to keep an eye on.

As your account balance grows, buying individual preferred issues through a discount broker makes a lot of sense. These days there are many to choose from with a wide array of yields and bond ratings. My most recent list of them is here--

But there is a bit of a paradox here. Young investors don't need much of a bond position until they get close to retirement. More senior investors should buy the preferred issues themselves. So I don't see much need for preferred ETFs.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.