Alternative I: Bond ETF's
Many larger, more popular funds can be tax efficient, easy to trade during the day (marketable) and inexpensive but the value you "buy at" may be more expensive (premium) than its underlying value and when you sell the value may be less (discount) than its underlying value. It is difficult for ETF companies to create a sampling strategy that matches the broader bond indices, therefore, the investor must scrutinize how diverisifed they are within size, sectors, etc.
Alternative II: Bond Mutual Funds (indexed or actively managed)
Diversified for the investor though you must pay attention to this (size, quality, sector) as well as to duration and cost when selecting funds.
Alternative III: Individual Bonds
Difficult to adequately diversify and manage on your own (professional management is important). This method can be tax efficient and you can trade bonds during the day, unlike bond mutual funds.
Managing duration and having enough bonds to create an allocated portfolio requires more funds than many investors are willing to allocate to this strategy.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.