Questions on buying individual bonds

[grand_canyon]

I'm looking for a way to improve my fixed income investments. I had some preferreds (PFF) and REIT (REM) etf's. I thought the risk was low on these but after the last downturn I was lucky that I got out barely above even including all the dividend payments. I guess I'm looking for the highest fixed income payout without the least amount of risk.

The long term 30+ years A corporate are paying 5.3%. Looks like the historical default rate is low at around 1.26% say someone had 50Gs to invest is it best to buy 50 bonds at the minimum $1,000 or is it better to buy 20 at $5,000 or 5 x 10,000 etc to spread risk. I would guess my biggest risk is when interest rates go up no one would want my bonds so I'd have liquidity problem if I ever needed the money.

Any thoughts would be appreciated.

[aditi]

Hi,
individual bonds buying is not case of profit dealing because combination will be great one

[disneysteve]

say someone had 50Gs to invest is it best to buy 50 bonds at the minimum $1,000 or is it better to buy 20 at $5,000 or 5 x 10,000 etc to spread risk. I would guess my biggest risk is when interest rates go up no one would want my bonds so I'd have liquidity problem if I ever needed the money.

You are correct that there could be liquidity issues but as long as you hold the bonds to maturity, that wouldn't matter. You would continue to collect your coupon payment. I would agree that spreading the risk by going with a variety of issuers is always a good idea.

[kv968]

The long term 30+ years A corporate are paying 5.3%. Looks like the historical default rate is low at around 1.26% say someone had 50Gs to invest is it best to buy 50 bonds at the minimum $1,000 or is it better to buy 20 at $5,000 or 5 x 10,000 etc to spread risk. I would guess my biggest risk is when interest rates go up no one would want my bonds so I'd have liquidity problem if I ever needed the money.

Any thoughts would be appreciated.

You might want to check to see what companies offer "internotes" or bonds that have a minimum of $1000. Most corporate bonds issues have a $5000 minimum.