Post: #1

Seems like a dumb question.

I have pretty much invested all my money into Vanguard S & P 500, and it did ok. I am thinking of start putting money in to US Treasury Bond, which is very low yield, but a reasonable asset allocation given my 100% position in stocks.

How do you guys buy Treasury Bond? Treasurydirect.com?

I prefer no to buy Bond fund. I like the idea of having my bond mature and collect the face value while collecting interest in the mean time.

Post: #2

I think the only issue is going to be that at some point rates will rise and your bond will lose value. In case you ever had to sell it prior to maturation.

Post: #3

https://www.treasurydirect.gov/tdhome.htm

the treasury direct website is a government website.

You may want to check out municipal bonds as well to weigh it against the risk of bearing treasury bonds. Consider also that municipal bonds aren't taxed by the federal government. You may want to find an account to help you on this.

Post: #4

(11-24-2015 10:57 PM)PolymathGuru Wrote:  https://www.treasurydirect.gov/tdhome.htm

the treasury direct website is a government website.

You may want to check out municipal bonds as well to weigh it against the risk of bearing treasury bonds. Consider also that municipal bonds aren't taxed by the federal government. You may want to find an account to help you on this.

Polymath, have you bought from treasury direct?

I am aware of the risk, but it is also the most basic investment instrument yet I have no experience with it. The concept is very simple. I figure if I buy some now. As the interest start rising I will be familiar with the process and I can jump on it.

Muni bond will be next on my research. Again, treasury bond is so basic I figure I should hold some of it. I am starting to grow my portfolio with 100% stocks, bond is the logical choice to balance it out.

Post: #5

I'm able to buy bonds directly through my broker Charles Schwab. Any good brokerage firm should allow you to buy treasury bonds without issue.

Treasury Direct will give you a paper receipt if that's what you'd like.

Post: #6

Here is a good tutorial for buying bonds from a broker, in this case Fidelity:

http://gyroscopicinvesting.com/forum/bon...-tutorial/

Treasury Direct cuts out the middle man, so there is less complexity, and no fees, hidden or otherwise, but if I recall correctly, you can't buy and sell from Treasury Direct, and have to transfer them to a broker to do so.

Post: #7

(11-24-2015 08:43 PM)samsamsam Wrote:  I think the only issue is going to be that at some point rates will rise and your bond will lose value. In case you ever had to sell it prior to maturation.

You never know what's going to happen in financial markets. E.g. bond rates in Japan have been falling for 25 years. They're negative in Germany. It's possible they'll continue to fall here for the rest of your life.

Post: #8

I'd like to offer you an alternative viewpoint. If you are buying to learn about the process of buying a bond, sure.

If you are buying to diversify and/or hedge, Don't.

Institutions do it because they have a mandate and/or because they can't sell their equity holdings.

You have no such hurdles and are making gains in stocks. Stay long stocks. If you don't think the market will go up, sell. There is no reason at your capital amount for you to hedge.

You can get started with $100 to buy Treasuries, and most brokers will allow you access, or use treasurydirect. If not, buy a bond fund.

Post: #9

When my grandmother passed I received around $500 in treasuries bonds. She paid $250 for them around the time of my birth. If she put them in an S&P index fund I would have had $4300 instead. Depending on your investment horizon, perhaps you should invest in an index fund.

Post: #10

I have significant portfolio, self managed and experience.

You may not want to say, but it really depends on how much money (1st), then flexibility (2), sophistication...trading etc.

I have a Treasury Direct account and paper bonds from 12 - 15 years ago. Some of these I bonds are still earning 8%!

For a small purchase - you can certainly do that. It is an anachronistic website with security codes etc. Carefully note what you are buying as the "standard" bond has a 6 month interest penalty if cashed within 5 years. I don't think they will issue a "paper" bond anymore. They used to if a gift still - but not sure.

If you are looking to buy and hold - that will work, small purchase no fee. You could do a variety of US Bond funds - or even better buy one futures contract for a treasury note or bond - /ZN or /ZB. That requires a futures trading account.

If you go bond fund, I would open a discount brokerage account and avoid fees as best I could. Good Luck.