Basically long bonds are more susceptible to interest rate changes and we are in a period of rising interest rates. The analagy is with crocadiles: the dangerous ones are long and low!
As well as low risk government bonds you have corporate bonds of varying risk. Also you have Index Linked bonds.
You can diversify govt. bonds geographically and also to spread interest payments over the 12 months of the year. Corporate bonds should be diversifiied just like shares to mitigate any losses on 'bad' bonds.
Some stocks have high yields but if you are investing purely for income with low risk then bonds are the way to go.
Unfortunately life is all about risk: with 2% coupon and inflation at 2%+ then you have an inflation risk!
You could also look at annuities which give a fixed rate for your life span, unfortunately annuity rates are historically low.
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It would be a great for you that you are very much cure about your retirement planning and there are many ways where you can manage your finance which will be very helpful for securing your money.
Say my goal is to retire once my stock portfolio reaches 1 million in value. What's the best way(s) to buy bonds with that 1 mil? If I want retirement income, should I stay away from bond funds since they fluctuate in value? should i stick with treasury bonds since they are guaranteed, versus corporate bonds, which are not guaranteed?
should i begin buying bonds before i reach my target goal of 1 mil? for example, if the interest rate is really high, should i begin buying bonds, even though i can only buy a little at a time? and during times the interest rate is low (like now), should i only buy short term bonds or just stay entirely in stocks?
when i start buying bonds, how much should i buy at once? when i buy shares of a stock, i usually buy 5% at a time. would 5% work for bonds as well?
i understand that treasury bonds pay interest only 2x a year. so if i want to buy solely treasury bonds, should i buy a little each month so i'll have monthly income?
i hear that some people buy stocks with high dividends when interest rates are low like right now. but even if i buy a good stock like verizon, isn't it too risky since stocks can plunge? if i'm looking for pure income, should i just stay away from stocks entirely?
finally, on CNBC, they always mention what the rate is for 10 year bonds. i checked the government's treasury bond website, but apparently they only sell 30 years bonds. what 10 year rate is CNBC referring to?
sorry for so many questions, but i have no experience in buying bonds, so i'd like to figure out how to buy them before i get too close to my retirement goal. i'd appreciate any advice, links, books, etc. :)
