Bond Mutual Funds Online

As any investment advisor might tell you, mutual funds offer considerable benefits for the individual, self-directed investor. For one thing, they seem to be much more convenient to invest in than if one were to purchase individual securities. 

Bond funds offer monthly income, portfolio diversification, and professional money management. A bond fund is usually made up of individual bonds similar in maturity, quality, and type of issuer, as such, buying into a bond fund is a good way for the small investor to tap into a specific sector or objective without committing a large exposure. 

Clearly, investors that seek to invest in bonds that sell in high denominations, such as certain mortgage-backed and agency bonds, or bonds that are too complex for individual investors, including convertibles, sovereigns, junk, and derivative securities, would be better off investing in these securities through mutual funds. 

of course, the most attractive feature of investing in bond funds is daily liquidity — bond funds have no set maturity date—the investor typically has the option to sell on any business day at the next available net asset value (usually the end of the day). Plus, many bond funds offer a check-writing option on the balance in addition to allowing the investor to automatically reinvest income dividends and to make additional investments at any time. 

Investing in bond funds rather than individual bonds might also carry less risk and help to diversify a portfolio. Individual bond investors stand to lose all of their money if the issuer defaults. In contrast, a bond fund holds hundreds of different bonds from different issuers, reducing the effect if one issuer fails to pay interest or principal. 

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This is the mutual fund industry s watchdog, researcher, and disseminator of useful information (http //www.ici.org). Here, you can learn basics such as "What is a Mutual Fund ", as well as find information on lesser-known products such as exchange-traded funds and unit investment tmsts. For more information, see Chapter 10, "Bond Mutual Funds Online."... 

Throw out the newspaper and cancel your subscription to that magazine Everything you need to find out about bond mutual funds is available online—often free of charge and within seconds of a click of a mouse. 

Not all sites offering bond mutual fund information will allow you to actually engage in a transaction. (In Internet jargon, this category of site is an infomediary, since it provides information so that the user can later engage in a transaction using a different method, as opposed to a site involved in e-commerce, which allows for the full transaction to occur securely online.)... 

Most investors are timid to look at municipal bonds on tbeir own and buy muni funds instead. When you think about it, chances are that buying funds is an expensive mistake. Here s why most funds have an annual expense ratio over 1% per year. When you have a fund that invests in bonds yielding around 5%, you are giving away 20% of your return to your mutual fund company every single year Add the fact that you are not in complete control of your taxable events in a fund, and they start to look less and less attractive. So, how do you get started buying individual bonds Simple. You can run an online search at www.munidirect.com and type in your state, maturity range, and credit quality, and a list of bonds will be presented for you to choose from. 

Another thing is that many investors feel overwhelmed by the sheer volume of securities available for investment. Given the 7,000-1- mutual funds, as well as the hundreds of bonds viewable on the bond screeners available online through the Bond Market Association and most of the larger online brokers, most investors feel in-... 

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