Bond Investing

[Canoeboy]

I was not a fan of bond funds as I invested for retirement. Now 5 years into ER, I'm considering the addition of bonds into my fixed income ladder which is currently all CD's and Treasuries. Still don't like bond funds, however, recently started looking into fixed maturity ETF's as an alternative to buying/managing individual bonds. I'm also at the low end of the learning curve when it comes to bond investing, especially individual bonds.

What do you all think about iShares iBonds ETF's from BlackRock? Is this a good alternative to buying individual bonds? Seems like it would be more diversified, but with a 0.1% management fee downside.

Bond Newbie

 

[jazz4cash]

I don’t like bond funds either. I find individual bonds easy. Not much different than Treasuries or CDs. I am curious if it might be a good time to consider a bond ETF with targeted maturity like iShares offer.

 

[Montecfo]

Bond funds and ETFs have some advantages compared to individual bonds. They have their place, especially if you want to invest in high yield, bank loans, emerging markets or multi sector.

But even just for corporate there are advantages. And disadvantages of course.

I buy individual bonds and I use funds. What I do not do is buy funds or indexes ties to the agg. I want active management for bonds.

There are several threads here for different flavors of fixed income: treasuries, CDs, and bonds in general. You might get more info there.

 

[tizod]

I hate bond funds, as they are a variable to interest rates...which are highly volatile hence the funds can be. Not usually what you want in bonds. So I buy individual bonds. That said, right now CD's and other fixed income is better than the safer bonds (which also means high yield funds are into junk). So I'd stay out of the funds/ETF and into CD until things swing way down for CD/fixed. Hope you max your I-bonds etc. before a bond ETF....

 

[GravitySucks]

I was not a fan of bond funds as I invested for retirement. Now 5 years into ER, I'm considering the addition of bonds into my fixed income ladder which is currently all CD's and Treasuries. Still don't like bond funds, however, recently started looking into fixed maturity ETF's as an alternative to buying/managing individual bonds. I'm also at the low end of the learning curve when it comes to bond investing, especially individual bonds.

What do you all think about iShares iBonds ETF's from BlackRock? Is this a good alternative to buying individual bonds? Seems like it would be more diversified, but with a 0.1% management fee downside.

Bond Newbie

I had an 8 year ladder of iBonds last one will mature this December. When I bought them the spread between them and treasuries was about 1.5%. Last I looked (2022?) the spread on the 5 years were less than 1%.

The yields generally drop in the last year as the bonds making up the fund mature and they reinvest in short term paper. Reminds me i need to see if it would be better to sell and by a similar T bill.
(Shout out to PB4USKI on this part)

Not the worst investment I’ve ever made, not the best either.


Added- Just looked it up, IBDT (The five year from now) yields yields 4.5%. 5 yr treasury is yielding 4.05%. Not worth it to me. YMMV

 

[Quattro73]

I had an 8 year ladder of iBonds last one will mature this December. When I bought them the spread between them and treasuries was about 1.5%. Last I looked (2022?) the spread on the 5 years were less than 1%.

The yields generally drop in the last year as the bonds making up the fund mature and they reinvest in short term paper. Reminds me i need to see if it would be better to sell and by a similar T bill.
(Shout out to PB4USKI on this part)

Not the worst investment I’ve ever made, not the best either.


Added- Just looked it up, IBDT (The five year from now) yields yields 4.5%. 5 yr treasury is yielding 4.05%. Not worth it to me. YMMV

When did you buy?

 

[DrRoy]

I buy individual bonds through Fidelity. They have a great search tool, and you can talk to a rep at their bond trading desk if you like.

 

[GravitySucks]

When did you buy?

Seven years ago

 

[Texas Proud]

I bought a bunch of individual bonds in my Schwab account... I wanted the certainty of holding them to maturity...


Just looked... surprisingly I have almost a 12% cap gain since I bought...


Ooops.... just noticed that some are baby bonds or preferred shares which I classify as bonds in my head...