Can somebody help an old lady with Bond Funds? (inheritance, junk bonds, brokers)
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Location: When things get hot they expand. Im not fat. Im hot.
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Ill be 60 on my BD. Im semi retired and I have small amount $30000 that Im thinking of investing in bond funds. Im having trouble figuring them out. Ive read a lot and learned a lot but Im still having trouble figuring out just how much they pay and when. All the funds show long term growth of $10000 from 1999 to 2009. What Id like to know is if I put $10000 in today how much will it earn monthly/quarterly yearly.
AllianceBern Global Bond C and Dryden Short-Term Corporate Bd C have been recommended to me by my possble new advisor. When I do my go to meet Id like to at least sound like I know what Im doing.
Don't let a financial adviser intimidate you. A good financial adviser should be willing to put in the time to teach you about bond funds, bonds in general, stocks and mutual funds etc. The final decision should always be yours. If they are trying to sell or push you into something, find another adviser. A good financial adviser will be able to give you the answers you need pertaining to bond funds.
Take a bond fund like Vanguard Total Bond Market Index (VBTIX). This is an investment grade bond fund that I've been in for 9 or 10 years.
It currently is selling for $10.17 a share. $30,000 would buy you approximately 2,950 shares. This fund currently pays a dividend of $.036 per share, monthly. So your monthly income would be about $106.
You can look up this information for individual funds on Yahoo Finance, or on the various mutual fund families' websites.
thinking of investing in bond funds. Im having trouble figuring them out.
This High Yield Corporate Bond Fund graph is somewhat representative. You must have the temperament to accept share value fluctuations as a trade-off for the yield (monthly income). Include VWEHX in your research. On an investment of $30,000, the current yield of around 8.3% (changes daily) would provide in the neighborhood of $200 monthly income (before federal and state taxes).
This High Yield Corporate Bond Fund graph is somewhat representative. You must have the temperament to accept share value fluctuations as a trade-off for the yield (monthly income). Include VWEHX in your research. On an investment of $30,000, the current yield of around 8.3% (changes daily) would provide in the neighborhood of $200 monthly income (before federal and state taxes).
You have to have a very high tolerance for risk to invest in junk bonds. I have a lot of money in VWEHX. When the NAV took a nosedive last fall, I had quite a few sleepless nights and anxious days.
Junk's been looking good for a while now, my investment in VWEHX has recovered considerably, but still.....if my crystal ball had been working last summer, I would have sold all my shares and then bought back in in December when the NAV bottomed out at $3.90.
Junk bonds are really not the sort of basket you want to put all of your eggs in.
AllianceBern Global Bond C and Dryden Short-Term Corporate Bd C have been recommended to me by my possble new advisor. When I do my go to meet Id like to at least sound like I know what Im doing.
He's recommending load funds to you, which is what advisors do (because it puts money in THEIR pocket). Loads are commissions taken from your investment to pay your advisor for guidance, such as it is. C shares, which are what he's recommending, are the most expensive loads of all if you plan on holding a long time. Each and every year you'll pay a 1% load IN ADDITION TO the usual management fees. With bond funds, keeping expenses low is particularly important because returns are relatively modest. I'd highly recommend staying away from load funds and go with inexpensive no-load funds like those from Vanguard (as Ellise suggested).
As for high-yield bond funds, they can be very good investments at times, but they pay high yields for a reason: Because they're relatively risky. If you're going to invest in junk bonds, I'd suggest becoming familiar with them first. They're a different animal in some ways.
When the NAV took a nosedive last fall, I had quite a few sleepless nights and anxious days.
No one really knows their personal risk tolerance until experiencing a significant investment fund share value decline. On reflection, however, the VWEHX monthly income dividends have remained within a "ballpark range" . . which may be the main objective for many senior investors (as compared to total return). As long as you don't have to "cash out", only your heirs will be interested if investments are "up or down" as they fight over their inheritance.
I suggest you avoid any load funds entirely, the load is simply an unnecessary fee you don't need to pay. There are many fine funds available from no-load companies (Vanguard, T Rowe Price, etc.). An advisor who recommends load funds is working for his/her interests and not yours. Use a fee based advisor only, you will be much better off. Be aware that bond funds in a low interest rate environment are very dangerous if rates start to rise. JMO.
Location: When things get hot they expand. Im not fat. Im hot.
2,521 posts, read 6,333,880 times
Reputation: 5342
Quote:
Originally Posted by debtmonger
Don't let a financial adviser intimidate you. A good financial adviser should be willing to put in the time to teach you about bond funds, bonds in general, stocks and mutual funds etc. The final decision should always be yours. If they are trying to sell or push you into something, find another adviser. A good financial adviser will be able to give you the answers you need pertaining to bond funds.
Im not intimidated. As for questions. Im trying to learn as much as I can before we meet so I wont be overwhelmed with an information overload. I need to know what questions to ask and then I need to be able to understand his answers. He was highly recommended by some one who has used him for 20+ years. So hes probably okay. Unfortunately I have trust issues now. Oh I wont say anything but Ill be checkin up on everything. Reformed financial PollyAnna. Its my nature but Ive learned the hard way not to trust so much. Now this poor man is gonna have to pay Its kinda like your Ex cheated and now you make your DH keep the bathroom door open cause you think hes smuggling girls in thru the bathroom window.
Quote:
Originally Posted by Ellise
Take a bond fund like Vanguard Total Bond Market Index (VBTIX). This is an investment grade bond fund that I've been in for 9 or 10 years.
It currently is selling for $10.17 a share. $30,000 would buy you approximately 2,950 shares. This fund currently pays a dividend of $.036 per share, monthly. So your monthly income would be about $106.
You can look up this information for individual funds on Yahoo Finance, or on the various mutual fund families' websites.
Thanks ever so much Elise. This makes a lot more sense. Good grief why dont they just tell you this stuff instead of giving you 14 pages of multicolored graphs.
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Its kinda like your Ex cheated and now you make your DH keep the bathroom door open cause you think hes smuggling girls in thru the bathroom window. 
