Varying Your Bond Strategies
A common misconception regarding bonds is
that they are only appropriate for older or more conservative
investors. However, bonds should be considered by all investors
as part of a well-diversified portfolio, even though their role
may change over your lifetime.
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Using Bond Swaps
A passive approach to bond investing typically
involves purchasing a bond and holding it to maturity. With that
approach, you receive your entire bond principal and do not have
to worry about the effects of interest rate changes on the price
of your bond. However, as the interest rate environment changes,
there may be opportunities to use more active strategies for your
bond investments, such as bond swaps.
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Start Budgeting
Almost no one enjoys the process of analyzing
and budgeting expenditures, but inefficient and wasted expenditures
can be major impediments to accomplishing your financial goals.
It is difficult to manage your money if you don't know how much
you have or where it is going. Consider these steps when developing
your budget
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Stretching Your IRA
Individual retirement accounts (IRAs) are
usually viewed as retirement planning vehicles. But with increased
contribution amounts and the ability to roll over 401(k) balances
to an IRA, many IRA owners are finding they won't use the entire
IRA balance for retirement. Thus, IRAs are increasingly becoming
major estate planning tools. When used for estate planning, the
goal is to extend the IRA's life as long as possible so that beneficiaries
can benefit from the tax-deferred (for traditional IRAs) or tax-free
(for Roth IRAs) growth. How can you accomplish that?
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Protecting against Inflation with TIPS
Treasury Inflation Protected Securities
(TIPS) were created in 1997 to provide bond investors with inflation
protection by periodically adjusting the bond's face value based
on the increase in the Consumer Price Index for All Urban Consumers
(CPI-U). The bond's interest rate is determined at auction and
does not change during the bond's life, but the principal is adjusted
every six months. Thus, subsequent interest payments are based
on the increased principal amount.
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