Fixed Income

This blog contains information on a number of investing topics.  As always, do your own research.

iBonds

iBonds are a type of debt instrument issued by the US Government.  iBonds should be viewed as the “least risky” type of investment because they are backed by the US Government.  There are limits on how much you can invest each year in iBonds.

The benefits of iBonds include 1) inflation protection 2) interest income is deferred until the bonds are redeemed, and you can hold them up to 30 years until redemption 3) interest income on iBonds may not be taxed at all if it is used for certain purposes.  iBond income is also not subject to state income tax (until redeemed).

Posts tagged with “iBonds” explain and update the reader on iBond related topics.

Buying CD’s Through Your Brokerage Account

An alternate way of building a fixed income “ladder” is using Certificates of Deposit (CD’s) through your brokerage account rather than buying through a bank.  The vast majority of investors can use this method to buy interest bearing instruments with virtually no risk (as long as you don’t exceed the FDIC limits for a single bank).  These CD’s can be purchased in a transparent manner with few or no fees and held in your brokerage account which simplifies year-end tax reporting.  Even if the bank fails (this happened a lot during the 2008-9 crisis) they just pay back your principle plus accrued interest which just shows up in your brokerage account.

Posts tagged with CD’s explain and update the reader on CD related topics.

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