You've answered your own question. You have no need for bond funds. It is perfectly possible to draw down an equity portfolio by selling some shares, especially if there is a year when the end of year distributions are scant pickings. You'd rather, of course, do your selling in an up market, but that is when you don't have to do it because of plenty of distributions. If you want fixed income, individual bonds are fine, and you can get treasuries through Treasury Direct without any sort of commission. At maturity the proceeds magically appear in your bank account. Over time, bond funds pay managers, and they must take more risk to get the same return you can get. If the amount of money to be invested in fixed income is limited, there is some excuse for a bond fund. If you want to go with GNMAs, they pay somewhat better than regular bonds. They carry the problem of what do you do every month with a few dollars of principal? If you want to reinvest, it takes quite awhile to get enough to bother, and if you don't, after a few years your principal has ebbed away. A GNMA fund will take care of reinvestment of interest and principal prepayments and solve that problem for you. However, you can do as well by putting money into the pot and buying a bond every now and then with your GNMA proceeds. No, you don't need bond funds. I learned about bond funds in 1993 and swear I'll never own one again. Best wishes, Chris
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. M