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rbartels
Newcomer

rbartels asked 8 months ago in Bonds

How do I invest in bonds?

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Erin
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Erin responded 8 months ago

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You can invest in treasury or corporate bonds or bond mutual funds easily through online brokerages like e*trade. You can apply for an account here: http://www.filife.com/reviews/etrade-investment-brokerage.

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Dave Kansas
FiLife Contributor
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Bonds should play a role in a diversified portfolio. A couple things to think about:
Using the Rule of 100, you should have have "your age" invested in fixed-income assets, or bonds. That would mean at age 35 you'd have 35% of your investment portfolio in fixed-income investments.
That said, bonds come in many flavors. The safest are U.S. Treasury bonds. Because they are safe, they usually pay relatively low interest rates. Highly rated corporate bonds (of which there are fewer these days) pay slightly higher interest rates. Low rated, or junk, bonds pay high rates but also face a high risk of default.
Bonds also come in different durations, ranging from a few months to 30 years or even more. Usually, longer duration bonds have slightly higher interest rates.
One simple bond strategy is "laddering." You buy 1 year, 2 year, 3 year and so on up to 10 year bonds. After your 1 year bond matures, you buy another 10 year bond to maintain the ladder. This gives you duration and risk diversity.

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