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Bonds are the financial Cinderellas of the new millennium. Investors became aware of their charms when they saw their stock portfolios tanking while bonds were delivering double-digit returns. With the discovery that bonds could be a lucrative as well as a safe investment came a major problem: no single source of easily accessible information has been available that uniformly describes bonds, compares their relative strengths and drawbacks, and tells how to select and profit from buying them — until now.
Registered investment advisers Hildy and Stan Richelson have written The Money-Making Guide to Bonds to serve as this solid and thorough, yet user-friendly, resource on the subject. Over 35 different types of bonds and 20 types of bond funds are described, highlighting the specific advantages, risks, and tax implications of each.
The stock market decline clearly demonstrated to investors that bonds belong in every portfolio. The Money-Making Guide to Bonds not only gives readers the information they need to select bonds suited to their needs but also tells them how to allocate bonds within a portfolio and then concludes with specific strategies for reducing taxes and increasing income.
This solid, thorough, and user-friendly resource contains information on over 35 different types of bonds and 20 types of bond funds, highlighting the specific advantages, risks, and tax implications of each.
| Preface | xi | |
| Acknowledgments | xvi | |
| Part I | Bond Basics | 1 |
| Chapter 1 | The Evolution of a Bond: From a Verbal IOU to an Electronic Entry | 3 |
| Evolving in Early History | 5 | |
| Debuting in Colonial Times | 7 | |
| Developing after the American Revolution | 8 | |
| Entering the Twentieth Century | 11 | |
| Changing Through the Latter Twentieth Century | 12 | |
| Metamorphosing in Recent Times | 15 | |
| Chapter 2 | The Life of a Bond: How It Is Created, Issued, Priced, and Traded | 19 |
| By Way of Background | 20 | |
| Preparing a Bond | 22 | |
| Rating a Bond | 24 | |
| Setting a Coupon Rate | 27 | |
| Launching a Bond | 28 | |
| Understanding Risk | 29 | |
| Determining a Bond's Yield | 31 | |
| Pricing a Secondary Market Bond | 36 | |
| Part II | Bond Categories | 39 |
| Chapter 3 | U.S. Treasury Securities | 41 |
| U.S. Treasury Notes and Bonds | 43 | |
| U.S. Treasury Bills | 47 | |
| Strips | 48 | |
| Tips | 51 | |
| Chapter 4 | U.S. Savings Bonds | 57 |
| Series EE Savings Bonds | 59 | |
| Series HH Savings Bonds | 64 | |
| Series I Savings Bonds | 67 | |
| Chapter 5 | U.S. Agency Debt Securities | 73 |
| Fannie Mae and Freddie Mac | 74 | |
| Farm Credit System | 75 | |
| Federal Home Loan Bank System | 75 | |
| Financing Corporation | 76 | |
| Resolution Funding Corporation | 76 | |
| Student Loan Marketing Association | 77 | |
| Tennessee Valley Authority | 77 | |
| Federal Agricultural Mortgage Corporation | 77 | |
| Chapter 6 | U.S. Agency and Other Mortgage Securities | 81 |
| Mortgage-Backed Securities | 85 | |
| Collateralized Mortgage Obligations | 89 | |
| Chapter 7 | Municipal Bonds | 97 |
| General Features | 98 | |
| Risk Features | 99 | |
| Ratings and Other Security Enhancements | 101 | |
| Mechanics of Purchasing Munis | 103 | |
| Taxable Status of Munis | 103 | |
| Taxable Municipal Bonds | 104 | |
| Private Activity Bonds | 105 | |
| Tax-Exempt Bonds | 106 | |
| General Obligation Bonds | 106 | |
| Revenue Bonds | 109 | |
| Education Bonds | 111 | |
| Entertainment Industry Bonds | 113 | |
| Health Care and Hospital Bonds | 113 | |
| Housing Bonds | 115 | |
| Public Power Bonds | 117 | |
| Tobacco Bonds | 118 | |
| Transportation Bonds | 119 | |
| Water and Sewer Bonds | 120 | |
| Chapter 8 | Corporate and Junk Bonds | 123 |
| General Considerations | 124 | |
| Key Categories of Corporate Bonds | 127 | |
| Corporate Medium-Term Notes | 131 | |
| Corporate Retail Notes | 133 | |
| Corporate High-Yield Bonds: AKA Junk Bonds | 136 | |
| Corporate Convertible Bonds | 141 | |
| Chapter 9 | Bond Look-Alikes | 145 |
| Bank Certificates of Deposit | 146 | |
| Broker Certificates of Deposit | 149 | |
| Single Premium Immediate Fixed Annuities | 151 | |
| Deferred Fixed Annuities | 155 | |
| Nonconvertible Fixed-Rate Preferred Stock | 159 | |
| Part III | Bond Purchase Options | 165 |
| Chapter 10 | The Self-Directed Approach: How to Buy Individual Bonds | 167 |
| Buying Online | 168 | |
| Choosing a Broker | 172 | |
| Evaluating Bond Prices | 177 | |
| Chapter 11 | The Managed Approach: How to Choose among Bond Funds | 181 |
| Checking the Costs, Hidden and Unhidden | 185 | |
| Classifying the Funds | 188 | |
| Unit Investment Trusts | 188 | |
| Closed-End Funds | 189 | |
| Exchange-Traded Bond Funds | 191 | |
| Open-End Mutual Funds | 191 | |
| Understanding the Portfolio Types | 192 | |
| Tax-Exempt Funds | 192 | |
| Taxable Funds | 195 | |
| Choosing a Bond Fund | 205 | |
| Part IV | Bond Investment Strategies | 211 |
| Chapter 12 | Asset Allocation: How to Fit Bonds into a Portfolio That's Best for You | 213 |
| Allocating Your Assets | 214 | |
| Comparing Stocks and Bonds | 219 | |
| Selecting Bonds That Meet Your Needs | 221 | |
| Conservative Investments | 222 | |
| Balanced Investments | 223 | |
| Speculative Investments | 225 | |
| Reevaluating Your Portfolio | 228 | |
| Chapter 13 | The Maximization of Profits: How to Make the Most Money from Investing in Bonds | 229 |
| Knowing When to Buy and Sell | 230 | |
| Investing for Tax Advantages | 240 | |
| Investing by Risk Tolerance | 244 | |
| Investing for Income Needs | 250 | |
| Appendix | Useful Websites | 255 |
| Notes | 259 | |
| Index | 264 |
Anonymous
Posted February 3, 2003
I recently finished reading your book, and would like to compliment you on a well organized and clearly presented analysis of the bond market. Your discussion of the pros and cons of various types of bonds as well as the tax consequences of each provides valuable information for investors interested in this market. Also your extensive lists of web sites is an excellent research tool for anyone wishing to pursue the subject at length on his own. Congratulations, Lucille F. Merrick NY
Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.Anonymous
Posted February 23, 2003
Given the condition of the Stock Market this book has come at the perfect time for investors with all levels of experience. If you want to understand the game of bonds and how to win at it this book is the perfect tool.
Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.Anonymous
Posted March 10, 2003
This book is a great roadmap through the daunting maze of bonds available in today's market. My favorite parts were: *the detailed comparison of major categories of bonds, pointing out their advantages and disadvantages; *the 'Richelson Investment Rules' (7 guidelines to help you think through your personal asset allocations and strategies); and *the final chapter suggesting specific strategies to consider in a variety of situations (like 'strategies when interest rates are low or falling,' and 'strategies for keeping taxes low after retirement.') The book is interesting and upbeat reading, and it's so well organized I expect to refer to it to review information and suggestions again and again.
Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.Anonymous
Posted January 7, 2003
The Money-Making Guide to Bonds is an indispensable road map for anyone with a bond portfolio, contemplating a bond portfolio or who should be considering bonds but doesn¿t know it. This user friendly book balances practical solutions with a very readable dose of technical information. The Money-Making Guide to Bonds will enable the reader to effectively manage their bond portfolio or intelligently deal with a portfolio manager.
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Overview
Bonds are the financial Cinderellas of the new millennium. Investors became aware of their charms when they saw their stock portfolios tanking while bonds were delivering double-digit returns. With the discovery that bonds could be a lucrative as well as a safe investment came a major problem: no single source of easily accessible information has been available that uniformly describes bonds, compares their relative strengths and drawbacks, and tells how to select and profit ...