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Back about 2 years ago (ish) when I had money on the shelf and was reluctant to purchase common stock, I put the funds into zero coupon bonds on the secondary market. At the time, I was getting yields like 2.34% for a 3 year on up to 4.5% for a 23 year bond. Nice thing about them is that you are buying them discounted for the entire interest amount, so that $1,000 bond maturing in 2016 cost $874.50 and the one maturing in 2036 cost $$311.25. My thinking at the time was that I could quite literally sit on them until maturity ... or I could take my profit as it was convenient. Then, the bond market went crazy, interest rates fell, and I over a period of 6 months cashed in all but $9,000 (face value) at a delightful profit. That money is now in common stock and RIETS - all paying 3% or better in dividends.

I still like zero coupon bonds for safety and I will go back into them as the opportunity arises. Right now, the stock market is being very good to me, so I am building up my dividend-paying stock portfolio.

Disclaimer: all investments are held in either my self-directed 401K, an IRA or a Roth IRA.

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