Calling all savvy (and not so savvy) Smart Cookie investors. Thinking about adding Bonds to your investment portfolio? STOP! Do not click away because you have no idea what Bond is, and the term “ investment portfolio” makes you break out in hives. Read on and learn 3 things every girls needs to know about adding Bonds to her portfolio and three things you can do this week to take action!
James Classman at Kilplinger’s breaks it down into little Smart Cookie approved bites.
What exactly is a bond?
When you buy a bond, you’re really buying someone’s ( a government or a business)’ “sound debt”. Think of a bond as an IOU — a promise by a business or a government entity that it will repay the loan when it comes due and pay interest (typically in two installments a year) along the way.
Should I buy a bond over a stock?
Bonds offer the security of cash in your pocket now, rather than the possibility of future gains ( for the impatient, instant gratification type) . Bond investing lacks the thrill of buying and selling stocks, but that’s the whole point. Reap a steady stream of income with half your portfolio and take more chances — and have more fun — with the other half.
What’s the Smartest kind of Bond to Buy?
To get juicier yields, you may want to consider corporate debt. Consider investment-grade bonds issued by financial companies. For example in mid March, a General Electric Capital note, rated double-A-plus (just a notch below the top credit-quality rating) and coming due in September 2017, yielded 4.7% to maturity — about 1.5 points more than an equivalent Treasury.
What 3 things can I do this week to take advantage of bonds?
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Read this: Best All In One Bond Funds By Kiplinger
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Answer these questions A) Is the bond I’m buying inline with my long term financial goals. 2)Do I understand how much of my portfolio I want to have invested in bonds? 3.) Do I know the fees I’m paying to the fund manager?
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Call your investment adviser or broker and tell them the bonds or bond funds you would like to buy. Or Set up your e-trade or other online account and make your bond purchase.
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