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How Do Bond Mutual Funds Work?

When most investors speak of bond funds, they’re talking about mutual funds. And it’s no wonder. According to Morningstar, the total number of distinct mutual funds [more…]

What Are Closed-End Mutual Bond Funds?

Most mutual bond funds are open-ended, and some are not. The closed-end funds are a universe unto themselves. Unlike open-end funds, closed-end funds have a finite number of shares. The price of the fund [more…]

What Are Exchange-Traded Bond Funds (ETFs)?

Although relatively new, exchange-traded funds (ETFs) and bond ETFs have caught on big in the past several years. ETFs, like closed-end funds, trade on the exchanges like individual stocks. [more…]

What Are Unit Investment Trusts (UITs)?

A unit investment trust (UIT) is a bundle of securities handpicked by a manager. You buy into the UIT as you would an actively managed mutual fund. But unlike the manager of the mutual fund, the UIT manager [more…]

What Are Exchange-Traded Notes (ETNs)?

Unlike ETFs, the underlying investments (bonds, commodities, what have you) in exchange-traded notes are not necessarily owned by the issuer of the ETN. [more…]

What Is the Yield of a Bond?

Yield is what you want in a bond. Yield is income. Yield contributes to return. Yield is confusion! People (including overly eager bond salespeople) often misuse the term or use it inappropriately to gain [more…]

What Is Standard Deviation In Bond Investing?

When comparing different kinds of bonds — or any investments, for that matter — it helps to know the standard deviation. This is the most oft-used measure of risk when comparing investments. [more…]

Using RiskMetrics to Measure Investment Risk

An outfit called RiskMetrics offers a new, easier way of comparing investment risk. Instead of using standard deviation (the most common way of measuring risk), the folks at RiskMetrics have come up with [more…]

How Do CDs Compare to Money Market Funds?

All bonds are fixed-income investments, but not all fixed-income investments are bonds. Anything that yields steady, predictable interest can qualify as fixed income. That includes not only bonds but also [more…]

What Is Peer-to-Peer Lending?

Peer-to-peer lending is the new kid on the fixed-income block. If you haven’t checked out or LendingClub, you may want to do so. Even if you decide not to invest, you’ll likely find the cybertrip [more…]

How Do Annuities Work?

What’s the difference between an annuity and a bond? With an annuity, you don’t expect to ever see your principal back. In return for giving up your principal, you expect a higher rate of return. [more…]

Understand Stocks and Dividends

Stocks can generate returns in two ways: They can appreciate in value and they can pay dividends. Historically, dividends have actually accounted for the lion’s share of stock returns. Not long ago, however [more…]

What Is the Best Stock-to-Bond Ratio?

There are newer ways of thinking about how much of a retirement portfolio belongs in bonds. Most financial pros have moved well beyond the old adage, held dearly for years, that the percent of your portfolio [more…]

How Much Can You Safely Tap from Your Retirement Portfolio?

The 20 times rule is a thumbprint that gives you a very rough guide of how big a investment portfolio you need before you retire. In short, figure out how much you need in a year, subtract whatever retirement [more…]

Make the Most of Tax Advantages for Retirement Accounts

It’s important to understand how tax law affects your retirement accounts, while investing and while withdrawing. The Internal Revenue Service, in cahoots with Congress, gives the U.S. investor two basic [more…]

What Are the Best Short-Term, High-Quality Bond Funds?

Very short-term, high-quality bond funds are going to pay slightly higher rates of interest than money market funds and CDs but less than longer-term bond funds. They carry very little risk of default [more…]

What Are the Best Target-Retirement Date Funds?

Target-Retirement date funds (otherwise known as life-cycle funds) are an easy option, best if you have limited funds ($10,000 or less) or a real aversion to dealing with your investments. Like the Vanguard [more…]

Are Municipal Bonds a Good Investment?

The municipal bond market is now about $3.7 trillion, which is a little more than one-third the size of the Treasury market. But unlike Treasuries, which are held by investors all over the world — by both [more…]

Will Municipal Bonds Default?

Like the corporations that issue corporate bonds, the entities (cities, hospitals, universities, and so on) that issue municipal bonds are of varying economic strength — although the degree of variance [more…]

What to Look For in a Municipal Bond

Municipal bonds, like corporate and federal government bonds, are rated by the major bond-rating agencies. For many years, munis had their own rating system. Recently, however, the rating systems have [more…]

Maximize Tax Benefits of Municipal Bonds

Most municipal bonds are tax-free, but your personal federal tax bracket, as well as the income taxes you pay in your state or to your local government, have a great bearing on whether munis make sense [more…]

When Are Municipal Bonds Taxable?

Will you never pay federal tax on a municipal bond? Never say never. In some very rare instances, the tax can grab you from behind and make you not want to wake up on the morning of April 15. [more…]

Tips On Buying Municipal Bonds

Perhaps because the municipal bond market is made up mostly of individuals rather than institutional buyers, the number of sharks in fancy suits out to rip the hide off unwary investors is highest in the [more…]

Should You Invest In Foreign Bonds?

The ratio between what Americans invest in domestic bonds and what Americans invest in foreign bonds is somewhere in the ballpark of 30 to 1. Given the gargantuan size of the foreign bond market, you may [more…]

Should You Invest In Foreign Bonds of Emerging-Market Nations?

In the foreign bond market, you can invest in developed-world markets or emerging markets. Emerging markets is something of a euphemism for “poorer countries of the world.” Those who invest in them [more…]


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