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>Anyone able to help me with the pros and cons of bond funds/vs individual bonds - gov or corp? <

About twenty years ago, i began diversifying my investments to include fixed income securities. I buy primarily Florida AAA Insured Municipal Bonds. They are exempt from both federal and Florida state income taxes. Interest rates on insured bonds are sometimes 25 basis points less than uninsured bonds, but it is a price I am quite willing to pay for the extra security. Although I buy stocks through a discount online service, I prefer a full service broker for bond purchases. I use A.G. Edwards at the moment. Smith Barney (a subsidiary of Citigroup) has also provided excellent service for me. To boost the overall income in this fixed income portfolio, I add a few investment grade corporate bonds, and occasionally preferred stock (Original Issue Discount). Generally I prefer to buy bonds when interest rates are relatively high, and common stock when interest rates are declining.I tried both taxable and tax exempt bond funds, and found they did not meet the goals of my fixed income portfolio, primarily because both the dividend income and the principal (net asset value) fluctuate, and there is no maturity date for assured return of the principal investment.
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