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Zecco.com » General Investing » New Investors » Bonds?
Last post 05-18-2008, 9:35 PM by aquaswim47. 6 replies.
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  •  05-12-2008, 5:19 PM 28962

    Bonds?

    Reply Quote
    Hello,

    I'm new here. My question is simple. How do I buy bonds on the market? Many thanks!

    Cheers!

  •  05-12-2008, 5:42 PM 28963 in reply to 28962

    Re: Bonds?

    Reply Quote

    AGG and TIP these are lehman brothers us treasury ETF's.  I would stick only with US Treasury securities.  I hope this helps

     

  •  05-12-2008, 5:51 PM 28964 in reply to 28963

    Re: Bonds?

    Reply Quote
    Hi,

    Thanks! But, supposed I wanted to buy a particular bond, not an ETF. Let's say this one, for example:
    CARAUSTAR INDS INC

    How would I do that? Can I do it with Zecco?

  •  05-12-2008, 6:47 PM 28966 in reply to 28962

    Re: Bonds?

    Reply Quote
    I bonds or EE bonds are best for u. I wouldn't purchase the other bonds beside this.

  •  05-18-2008, 6:29 PM 29323 in reply to 28966

    Re: Bonds?

    Reply Quote
        Does anyboyd know whether we can trade bond with Zecco? I checked the fees list, but there is no fee for bond trading.

  •  05-18-2008, 6:42 PM 29325 in reply to 29323

    Re: Bonds?

    Reply Quote
    I don't believe bonds can't be traded through Zecco.  Did a quick google search, if you want to buy bonds try these guys: http://individuals.interactivebrokers...
    Fee structure for bonds:
    http://individuals.interactivebrokers.com/en/accounts/fees/commission.php?ib_entity=llc

    Most people on Zecco tend to be inexperienced, and deal in small amounts of money (I know I am).  Bond funds offer severe disadvantages over purchasing the underlying bonds, but since bonds usually come in minimum $1k lots, often more like $10k, diversification is next to impossible. 

    I like/own BWX, which is a basket of foreign treasury bonds.  There is also BND, Vanguard total bond market, EDV which is just US treasuries.

  •  05-18-2008, 9:35 PM 29329 in reply to 29325

    Re: Bonds?

    Reply Quote
    You can buy bonds through Zecco, but why buy individual bonds when you can have the diversified set of an ETF. The problem with individual issues is that it's one company and companies fail from time to time.

    Along with preferred stocks, they tend to be very illiquid; in other words, you may be stuck not being able to sell at a time whereby you need cash. I'd stick with bond ETFs that are readily convertible into cash even if that means paying an expense ratio.

    TFI - a long-term muni bond fund - typically practical for those in a high tax bracket (28% or higher); however, for a short-time these might make sense. The investments average a 4.8-5.0% coupon on the top 10 holdings and has a 0.3% expense ratio. The significant risk is that a 1% rise in interest rates will likely result in at least a 9% loss in the net asset value of the fund.

    Funds to consider, especially if you are in a low tax bracket include:
    1) IEI
    2) LAG
    3) LQD
    4) AGG
    5) BIV
    6) GKC
    7) BND
    8) BWX

    Listen to MoneyTalk as it will let you know about the importance of diversification even in your bond portfolio. He likes state municipal issues as well as a diversified portfolio, index funds, and a balanced portfolio. He has 3 model portfolios. He believes in CD latters and FDIC insured accounts. He's even said the quote, "return of your capital" is more important than "return on your capital." That's even more important when speaking of individual issues as if you need to pull your money out for some reason, you might not be able to. That could be a very dangerous financial predicament to be in having to wait for the bond to mature and hoping that when that happens, the company will have the funds to pay off the interest & principal. He does the work because he loves it and he seems to have helped out a lot of people, especially with preconceived notions that could have lost them a lot of money. For instance, there was a caller than had 15% of his portfolio in one bond and he discussed with him the risks of doing so and that anything more than 4% or 5% was way too risky whether it is an equity or a bond purchase of a single company.
    Aqua
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