No. of Recommendations: 0
Twenty years ago, zeros were a buzzword everyone was talking about and promoting. I think the deal was less paperwork sending out interest checks twice a year.

But in a taxable account they are a pain in the butt. You are supposed to pay income tax for the acrued but not paid interest income every year--even though you did not receive the payment in cash. What a pain!!

I'm not surprised that zeros are not on the secondary market very often. You would only sell one in an emergency or to settle an estate. Most are held to maturity.

Personally I would much rather have my interest in cash than in paper promises.

And if the issuer goes bankrupt, you get nothing for your investment. At least with cash payments you may have recovered half of your cost or more in interest payments.
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