A practical starting point for young investors who want bond exposure without buying individual bonds.
What Are Bond ETFs and Mutual Funds?
This makes them:
Diversified by default — you’re not relying on one bond issuer
? Analogy: Think of a bond ETF like a fruit basket. Instead of buying one apple (bond), you buy a basket with apples, oranges, and bananas (different bonds).
Bond ETFs:
Prices change throughout the day
Bond Mutual Funds:
Managed by a professional fund manager
Both pay you interest income — typically monthly — based on the bonds they hold.
1. Instant DiversificationYou’re not exposed to the default risk of a single company or government.
3. LiquidityYou can buy or sell ETFs anytime during market hours.
Popular Bond ETFs and Funds for Beginners
ETFs:
AGG — iShares Core U.S. Aggregate Bond ETF
LQD — iShares Investment Grade Corporate Bond ETF
VBTLX — Vanguard Total Bond Market Index Fund
Always check the fund's expense ratio (fees) before investing.
Interest Rate Risk: Bond prices fall when interest rates rise
Fees: ETFs usually have lower fees than mutual funds
How to Buy Bond ETFs and Mutual Funds
Many robo-advisors also include bond ETFs in their diversified portfolios automatically.
"Bond funds are like a ready-made bond portfolio — ideal for investors who want the benefits of bonds without the hassle."
A Beginner’s Guide to Investing in Bonds
When to Add Bonds to Your Investing Portfolio (Coming soon)
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This article was written by Itai Levitan at www.forexlive.com. Read More Details
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