Bonds - holding to maturity vs. trading

[Rianne]

We hold all our CDs and treasuries to maturity but buy larger coupons for income. Our ladder is going further out now that rates are 5-6%. All the shorter-term bonds are coming due which gives us a nice savings/interest future. We'll be long-term investing in bonds (not bond funds).

 

[JJpop]

My goal with my bonds is income, so I hold 90% of my bonds to maturity. However there are opportunities to flip bonds occasionally and I will do that. It’s actually pretty easy. This morning I sold two agency bonds paying in the 5% range, continuously callable, made a few hundred bucks if you include interest already paid and I flipped them into two, quality corporate bonds paying in the 7% range with longer no call periods. It’s just taking advantage of what the market offers. It’s not for everyone, but I enjoy adding to my income in a relatively easy way.

I have been thinking about buying quality corp bonds or agency bonds in my Roth with 6 to 7 pct yields and call dates maybe close to a year out.
Is this something that you have been doing for a long time?
I just bought a 5 year non callable monthly paying cd at 5.05 but am thinking your strategy is better.

 

[I am He]

I think the key is to assume you're holding to maturity. Then you have your "worst case" understood. They you could choose to continue holding or not.

I think if you don't intend to hold to maturity that you might be better in a fund for easy liquidity/rebalancing.

 

[pb4uski]

I "generally" hold to maturity. Occasionally, I'll sell before maturity for a tactical shift. For example, last week I decided to increase the weighted average maturity of my ladder and even out the rungs so I sold a lot of 2024-2025 maturities and bought 2026-2028 meturities. But such changes are unusual for me.

 

[COcheesehead]

I have been thinking about buying quality corp bonds or agency bonds in my Roth with 6 to 7 pct yields and call dates maybe close to a year out.
Is this something that you have been doing for a long time?
I just bought a 5 year non callable monthly paying cd at 5.05 but am thinking your strategy is better.

I run ladders with the goal being high current, reliable (long call/ no call) income followed by capital preservation. I have some below par bonds for total return, but that changes the taxation for muni bonds of which I hold a bunch. My yields in total are over 6.7%. The muni ladder is closer to 5%, but tax free.
I started to add duration and more non call or long call bonds in the last while as I believe the worst is over for rate increases. We might see a little more but nothing like what we have seen in the past. The last day or two all those recent buys have shot up substantially and are selling above par. If this latest tipping point isn’t the final one, it tells me when it finally does hit, any bond with duration and call protection with a good coupon will appreciate rapidly.

 

[JJpop]

I run ladders with the goal being high current, reliable (long call/ no call) income followed by capital preservation. I have some below par bonds for total return, but that changes the taxation for muni bonds of which I hold a bunch. My yields in total are over 6.7%. The muni ladder is closer to 5%, but tax free.
I started to add duration and more non call or long call bonds in the last while as I believe the worst is over for rate increases. We might see a little more but nothing like what we have seen in the past. The last day or two all those recent buys have shot up substantially and are selling above par. If this latest tipping point isn’t the final one, it tells me when it finally does hit, any bond with duration and call protection with a good coupon will appreciate rapidly.

It seems like most of the bonds I want to buy are all callable.
I think I am too focused on companies I know like Bank of America,Wells Fargo,etc.

 

[ShokWaveRider]

I always hold everything till maturity. CDs, MYGAs etc.

 

[COcheesehead]

It seems like most of the bonds I want to buy are all callable.
I think I am too focused on companies I know like Bank of America,Wells Fargo,etc.

Callable isn’t a bad thing. When it’s callable is the key. If the call is X years out and that fits your ladder, nothing wrong with that.
I own some callable munis and taxable bonds, but they don’t hit the call window until 2029 or later. That works for me.

 

[Texas Proud]

It seems like most of the bonds I want to buy are all callable.
I think I am too focused on companies I know like Bank of America,Wells Fargo,etc.

I looked at the ratings... I do look at the company to make sure they are not about to go under but ratings match yield pretty well..