Investing in Bonds For Dummies
Book image
Explore Book Buy On Amazon

It you're looking for a bond fund that's going to produce steady returns with little volatility and very limited risk to your principal, start with a bond fund that is built of low-volatility bonds issued by credit-worthy institutions. A perfect example would be a short-term Treasury bond fund. If you're looking for kick-ass returns in a fixed-income fund, start looking for funds built of high-yield fixed-income securities.

One of the main characteristics you look for in a bond is its tax status. Most bonds are taxable, but municipal bonds are federally tax-free. If you want to laugh off taxes, choose a municipal bond fund. But just as with the individual muni bonds themselves, expect lower yield with a muni fund.

Also pick and choose your muni fund based on the level of taxation you're looking to avoid. State-specific municipal bond funds filled with triple-tax-free bonds (free from federal, state, and local tax) are triple-tax-free themselves.

About This Article

This article is from the book:

About the book author:

Russell Wild is a NAPFA certified financial advisor and principal of Global Portfolios, an investment advisory firm based in Allentown, PA that works with clients of both substantial and modest means. He has written two dozen books and numerous articles on financial matters.

This article can be found in the category: