No. of Recommendations: 1
My objective in buying individual bonds is to create an annuity-like income stream. I am prepared to risk capital in order to increase income. That’s why I stick with junk bonds. I’m basically a buy-and-hold investor from way back, so I buy bonds with the intention of holding to maturity.


I was surprised to see that our goals and results don't differ that much. Here's my quick summary of my current allocations:

Positions Cost CY YTM
Invest-grade 108 $217k 6.1% 8.3%
Spec-grade 221 $338k 8.5% 11.7%

What really should be done, however, is a break-down into five categories:

Cash-equivalents (e.g., Treasuries, Agencies, and AAA corporates and munis)
Defensive (e.g., munis and corporates rated AA to A)
Enterprising (e.g., munis and corporates rated BBB to BB)
Speculative (e.g., corporates rated B to CCC)
Lottery Tickets (e.g., tobacco settlement zeros, coal and solar bonds)

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