Investing in Bonds FD

This book is fun, easy-reading, light-hearted, and very interesting. It is not only a primer on bonds, but also a very good book about general investing. The book keeps it basic and simple while telling you everything you need to know about investing in bond mutual funds. It does not give you the superfluous details about investing in individual bonds which requires an extraordinary desire and at least $350,000 to invest. I found the other popular bond books to be too technical and too focused on individual bonds.The book tells you all about all types of bond funds, their advantages and disadvantages. It presents different personal financial situations and describes appropriate allocations of various bonds funds.As with the Dummies series, margin notes let you know what is important, what is nerdy, and what is dangerous. You can easily skip paragraphs and even whole chapters which are not pertinent to your situation.250 pages are divided into chapters which can easily be read in one sitting.

I'm often disappointed by books in the "Dummies" series but this is exactly the elementary introduction to investing in bonds that I was looking for. I've followed the stock market and bought and sold individual stocks since I was child but I've never bought an individual bond. Financial advice books like Personal Finance After 50 For Dummies routinely mention that people should have a diversified portfolio of stocks and bonds but they never seem to explain how exactly one would go about buying a bond. I think the expectation is that you need to consult a financial advisor or a full-service broker but I am loathe to spend money on financial advice that I should be able to learn on my own.This book explains why buying bonds online, although doable, is not as straightforward or inexpensive as buying common stock online simply because the bond market has not undergone the revolution in reduced fees that the stock market has seen (I remember the days before discount brokers to say nothing of online trading). Some key takeaways from this book include: you need about $350,000 to make buying individual bonds make sense, otherwise stick to bond funds or ETFs, and if you do buy individual bonds, don't expect to sell them before maturity because of the (mostly hidden) fees you will incur.The author is mostly familiar with online bond-buying through Fidelity, which is fine with me personally but his tips may or may not apply to other brokers. I haven't yet decided if I should devote a significant portion of my portfolio to individual bonds but I now at least understand how to research the hidden fees and how I might go about building a "ladder" of diversified bonds.

While this book is very educational, the author continually recommends bond funds, particularly bond index funds, and discourages buying individual bonds saying that they're riskier than bond funds. This is a great disservice to retired people looking to preserve their money.FACT: Look at the chart of BIV, one of the most popular bond index funds by Vanguard. The shares of BIV lost over 10% of their value. If you had bought shares of BIV in July of 2016 you would have paid around 88.50. In December of 2018 the price had dropped to around 79.50. As of this writing they're still only back up to $83.50 which means that, after three years, you're still down 5.6% if you had bought BIV in July of 2016. How is that safer than individual bonds? If you had bought a 3-year individual bond in July of 2016 you'd be getting your entire principal back, not 5.6% less.Much of what he writes assumes investors are not going to hold bonds to maturity. Most bond holders who invest for income do hold the bonds to maturity. Even if interest rates drop and bond prices go up, there's really no point in selling the bonds before maturity because the interest you would get with a new bond would be lower than what you have now (a bird in the hand). Throw in transaction costs and you could end up losing money.ALSO, the author keeps stating the return on bonds and bond funds assuming you re-invest the coupon payments. Most retirees that I know need their coupon payments for income and don't reinvest them. He needs to be more realistic in his coverage of bond and bond fund returns, as well as bond "duration."Other sources I've checked say that if you want capital preservation, as most retirees do, then go with individual bonds, picking a quality that coincides with your risk tolerance, and use bond funds if you want to speculate on future moves in interest rates. As a retiree looking to preserve my nest egg, this seems far more logical.All that being said, I originally got his book from the library but decided to purchase a copy because much of the material he presents is very helpful and can serve as a valuable reference. I also found it an easier read than The Bond Book.

Good introduction for folks that want the basic knowledge of bonds. Easy to read!

This was one of the best overall books on investing I've read, and I've ready about 10 in the last month. While this book is mainly about Bonds, Russell spends quite a bit of time showing how bonds fit into a balanced portfolio and how to set up such a portfolio. As a newbe, that was very helpful to me He also removed a lot of the mystery of bonds, especially about buying and selling them, as well as why the price of bonds goes down when the interest rates go up, and vice versa. Especially important was understanding the effect of rising interest rates on short, medium, and long term bonds.After reading this book, I decided to let the funds like Vanguard do the heavy lifting, since their expense ratio is very low and takes the hassle out of buying bonds. Russell also gives a lot of specific examples of the different types of funds available so that I would get a feel of what to expect from them.