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I'm a first time poster getting ready to retire and
looking for a good mix of income. My broker indicates that I can get a reliable stream of income from the
highest rated corporate bonds. However, I have never
invested in bonds before, except in 401K Bond Mutual
Funds where the results were negative. What are
suggestions as I possibly add this diversification as
an alternative to CDs? Obviously I realize the bonds
are not guaranteed. Will appreciate ideas. Thanks.

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While I am not going to say anything about corporate bonds, I thought I would suggest other sources of general retirement investing information which you will hopefully find useful....

The Retirement Investing bulletin board is at: http://boards.fool.com/messages.asp?id=1040013000000000

Also, Pixy wrote a nice little article in April about retirement income: http://www.fool.com/retirement/retireeport/2000/retireeport000417.htm

My two cents.... since you are (hopefully) planning a retirement which will last longer than 5-10 years, at least part of your retirement investment is long-term and should therefore be invested in stocks.

You might also find the Retiree Portfolios of interest at: http://www.fool.com/retirement/retireeport/retireeport.htm
(with an introduction at http://www.fool.com/specials/1999/sp991206retireports.htm )
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Greetings, 1937Fool, and welcome. You wrote:

<<I'm a first time poster getting ready to retire and
looking for a good mix of income. My broker indicates that I can get a reliable stream of income from the
highest rated corporate bonds. However, I have never
invested in bonds before, except in 401K Bond Mutual
Funds where the results were negative. What are
suggestions as I possibly add this diversification as
an alternative to CDs? >>


I hope you are intending to invest no more than about 40% of your retirement savings in bonds. That's the maximum most folks should have in fixed income vehicles like bonds and CDs to maintain their purchasing power. Inflation remains your enemy, and bonds and CDs are very poor inflation fighters. Thus, about 60% of your stash should remain in equities (i.e., stocks) so you can keep protect both your income and your principal from inflation.

As to the bond investments themselves, the actual instrument as opposed to a fund is a great way to go assuming you hold the bond to maturity. You can get the income while your principal has little risk of declining. The only way you would lose (other than purchasing power on the principal) is if the issuer defaulted, an unlikely event using double-a rated bonds or higher.

Regards..Pixy
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There are high quality corporate bonds that are listed each day on the NYSE. These still need to be purchased via a broker. The yield is shown for each as well as the end date of the bond.

Some are callable, so you need to be aware of that fact for each bond. It is easy to obtain triple A bonds from AT&T paying over 7.5 to 8.0% actual yield.

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There is a very good board on bonds and fixed income investing right here at the Fool.

http://boards.fool.com/Messages.asp?id=1030062000265000

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Hello 1937Fool,

I was born in 1937, and presume this is your birthdate too. And, I retired several years ago.

Individual bonds are more difficult to understand and to buy than stocks. Corporate bonds can also be more risky than you would think if you buy the wrong ones or fail to diversify. There are also some fairly new inflation indexed government bonds now available. They look interesting to me as a secure way to protect against inflation but have some other drawbacks.

I just bought a book entitled "The Bond Bible". The author is Marilyn Cohen. I've not read it yet, but a quick scan looks promising.

Good luck on retirement.

Roelf
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I have been building an individual bond portfolio and have added a number of taxable municipal zero coupon bonds in my tax deferred accounts. Currently I have been buying some 8-12 years in the 7.3%+ yield range. They are AAA rated and insured. Most are issued out of CA or NY. They have some capital gains opportunity although they don't spin off immediate income since they are zeros. AAA's in corporates are certainly worthwhile. If you have the means to buy a ladder of good bonds, default risk is minimized and held to maturity, you receive your principal back. I have always shied away from bond funds because of the loss of principal risk.
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If you don't need the income, why are you buying bonds vs. equities? I would think Index Funds or growth funds would be more appropriate. Your thoughts.
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