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In the 2003 era, I moved some stock mutual fund money into Ginnie Mae Bond funds that at the time were averaging about 6% APR or better. Given the Stock market was tanking, I was not sure that I wanted my money to stay in money market funds. I have a far better track record (Total Return) when playing with monopoly money than my real money.
For several months, the Ginnies Mae Bond funds did what I expected of them and I was content.
About a year ago, I "woke up" to find my Ginnie Mae Bond funds had a NAV almost a dollar below my inital purchase price. The net result was my "interest" aka "dividends" were shattered by the NAV decrease.

At the time, I knew nothing about purchasing bonds or CDs thru the brokerage house of my choice.
In summer of 2007, my Dad died. I became overseer of the family trust. It was not large enough to be turned over to a professional, but I have to see my mother can live on it despite a 10% of gross income tax increase because she is a widow and 2008 forward must file single tax status.
I have become more knowledgeable about bond purchases and thankfully, the brokerage house that I use has reduced their bond commission schedule by 50% since we started to purchase bonds ourselves last fall (2007)
We have been blessed with only a few bond calls. One bond that I purchased for the family and a couple that Dad purchased a few years ago. In each case, we had a net bank deposit greater than Money Market or most CDs have been paying. After learning about purchasing bonds, I see very little advantage in CDs beyond the FDIC insurance. IF you purchase the upper tier of investment grade bonds like "Agency Bonds", there is no need for FDIC insurance. You just have to avoid Sallie Mae since that agency became unhooked from the Federal Govenment relationship. There is always a risk of another agency doing the same.
We choose Agency Bonds ranging from 6 to 15 years paying 6% APR or better. Mom purchased Treasury Bonds prior to Dad's passing and we moved them to the brokerage house since they no longer charge a fee if we have to sell them which is unlikely. Some of them pay out monthly which helps balance the cashflow.
With the exception of the "Agency Bonds", all corporate bonds we purchase have a call date 5 years or more out or "Call Protection". We also look for a feature called either "Estate Feature" or "Survivor Option". We submitted 5 of Dad's bonds under the Survivor Option. It took 3 to 6 months for those bonds to be turned into cash. However, in those particular instances, it was worth it as the cash sale value of those bonds (issued by GMAC and Countrywide) had fallen below 90% of face value (PAR) or the interest rate was about 5% when we could purchase 6% easily.
With careful shopping, you can purchase very close to PAR (adjusted for commission aka "concession fee") well rated bonds which yield about 6% APR but do not offer compound interest. It is not as easy as when I began a few months ago, but by the same token until this week, I have been surprised how little the sale/purchase value of the bonds I purchased changed given the Fed rate cuts since October 2006. Within the past couple of weeks, I was surprised how certain Fed Treasuries rose above par to the rediculous levels they did after last weeks 3/4 cut. It made it outright dumb to hold on to some short term (less than 2 years) Treasuries at 4% APR when I could collect a 3% premium on the spot and reinvest the principle at 6% APR but now with state income tax on the interest going forward.
There is some NAV risk, but so far, it has been no worse than some bond funds I still hold.

As usual for me, I have rambled a bit, but hopefully, you can get some wheat out of the chafe.
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