Comments on: Direct Bond Ownership vs. Bond Funds

By: craigr

craigr — Tue, 06 Apr 2010 02:27:20 +0000

It’s best to just call Fidelity and work with their bond desk. I don’t know anything about their services but they almost certainly can help you out.

By: SN

SN — Mon, 05 Apr 2010 15:59:24 +0000

Hey Craigr, Can you point to some material (article, message post etc) which talks about how to buy treasuries from Fidelity, and also how to compare them…which ones to buy (YTM, Coupon etc)?
If they walk through an example at Fidelity that would be great. I do get that one should buy between 25-30yrs maturity.

By: craigr

craigr — Thu, 17 Dec 2009 19:45:22 +0000

I think as long as the bonds are in the 25-30 year range you’ll be fine. If you want to buy from the same series that shouldn’t affect things as long as the maturity is in that 25-30 year range. Once the bonds get down to 20 years you sell them off and buy new ones in the 25-30 year range again.

By: Joel

Joel — Thu, 17 Dec 2009 18:23:59 +0000

Craig,

When purchasing additional 30 year treasury bonds, which option should I take: purchase the same treasury bond in the secondary market or a new treasury issue. For example, I purchased a 30 year bond early this year and its almost time to rebalance. Shouldn’t I just purchase the same bond in the secondary market since its still between 25-30 years and it would be easier to manage since I’m only preoccupied with 1 treasury bond instead of establishing a bond ladder. Thanks for all your help and I’m glad you’re back on.

Joel

By: craigr

craigr — Thu, 17 Dec 2009 05:15:04 +0000

If you buy bonds from 25-30 years you’ll be fine. Whether new 30 yr. bonds at auction or secondary market shouldn’t matter too much in the end. TLT is a good ETF for what it does. It’s not better than direct bond ownership though. So if I could do either, I’d just buy directly and eliminate the middleman of the ETF.

If managing your own bond ladder is too nerve racking, then TLT is an acceptable substitute provided you know you’re taking on slight manager risk. TLT worries me a lot less than other Treasury bond funds I’ve seen offered.

By: 6 Iron

6 Iron — Thu, 17 Dec 2009 04:08:07 +0000

Craig,

If you were transferring/transforming your present accounts to a permanent portfolio, would you:

1) Buy only 30y Treasuries
2) Create a bond ladder with maturities from 25 to 30 years with long term treasuries from the secondary market
3) Buy TLT initially, then attempt to make future contributions in the form of direct 30 year treasury purchases.

Thanks.