retirement income

[disneysteve]

You might want to check out Optionshouse too.

I was curious if they handled bonds as well so I checked their site and it says, "We can also accept orders by phone for U.S. treasury bonds and listed corporate bonds." So it looks like you can do bond purchases through them but only by phone, not online. I can't seem to find the fees for bond purchases though. I suspect that if you mainly are looking to trade bonds, they probably aren't the best choice but I'm not sure about that. That's just the impression I get browsing their site.

[kv968]

I was curious if they handled bonds as well so I checked their site and it says, "We can also accept orders by phone for U.S. treasury bonds and listed corporate bonds." So it looks like you can do bond purchases through them but only by phone, not online. I can't seem to find the fees for bond purchases though. I suspect that if you mainly are looking to trade bonds, they probably aren't the best choice but I'm not sure about that. That's just the impression I get browsing their site.

Thanks Steve. I haven't checked them for their bond commissions since I wasn't interested in purchasing any. I looked around and couldn't find a fee for them either.

I did however check out Scottrade and besides the secondary market for listed corporates (which they charge a $35 fee + $3/bond) all other bonds (treasuries, new corp., etc...), "Scottrade acts as the principal" and the bonds will be marked up or down. I asked a rep what that meant and she stated that there's usually a 1% or less (with a max of 2.5%)markup on the principal that's already in the price of the bond . So I guess for example, a $5000 bond would cost about $50 to purchase. I'd suggest the OP contact Scottrade and really figure out the price structure before purchasing any.

[kv968]

Thanks so much for the suggestions. I really like the idea of purchasing bonds on the secondary market. I don't know why I didn't think of it as I am a fan of the book "Your Money Or Your Life". My CD is a Traditional IRA. Will I have a tax liability on the principal if I don't roll it over into another IRA account? I know treasury bonds do not qualify for IRAs. I'm so glad, Steve, you had responded to my original question. People like you make this a great site. I have been reading it for years.

If you need to generate 4.25% on your money know that you won't be able to do that currently using treasuries alone. 30 year bonds are yielding only ~3.3%.

[disneysteve]

If you need to generate 4.25% on your money know that you won't be able to do that currently using treasuries alone. 30 year bonds are yielding only ~3.3%.

Though aren't those tax-free? That would make a 3.3% yield equivalent to a taxable yield of about 4.4% in the 25% bracket.

[kv968]

Though aren't those tax-free? That would make a 3.3% yield equivalent to a taxable yield of about 4.4% in the 25% bracket.

No they're not. You don't have to pay state and local taxes on the interest but you do have to pay federal. Saving bonds (EE and I) defer the taxes until they're redeemed or reach maturity.

Nice racket ain't it? I'll loan you money AND charge you on the interest I pay you.

Muni's you don't have to pay federal (or state and possibly local if you live in the issuing state).

[disneysteve]

No they're not. You don't have to pay state and local taxes on the interest but you do have to pay federal. Saving bonds (EE and I) defer the taxes until they're redeemed or reach maturity.

Gotcha. I'm not that familiar with all the ins and outs of bonds.

[mysammy]

retiremnet income

Some of the bonds in the secondary market do pay an interest rate higher than the current rates. They are listed in the Wall Street Journal but you need a broker to buy on the secondary market. There is, also, a book on Amazon that explains this better than me. It is called "Treasury Securities" by Donald Nichols. I guess this type of investment would only appeal to older, conservative investors.

[PetMom]

The charity trust has always been a somewhat trusty solution.

Only what happens if the charity goes out of business?

Although does not happen often it does happen, charities are
having a hard time now.

What would happen with your money fully in their hands?

This has always been thought of being a reliable option.

[disneysteve]

The charity trust has always been a somewhat trusty solution.

Only what happens if the charity goes out of business?

That's a good question. I guess it depends on how the annuity is set up and funded. I'd certainly ask that question before buying in.

How do other annuities work if the issuing company goes out of business? If I buy an annuity from Met Life and they crash and burn, is my money gone?

[kv968]

How do other annuities work if the issuing company goes out of business? If I buy an annuity from Met Life and they crash and burn, is my money gone?

There is an FDIC type gov't agency that would cover up to I think $100k - $500k in annuities (depends on the state), but beyond that I'd imagine you'd only get what could be retrieved in a liquidation. That's why it's always good to check the credit rating of the company you're doing business with regarding those types of investments.

In reality though, if (and it's a pretty big IF but look at what AIG went through) Met Life were to go under, someone would more than likely buy them so you'd be ok. Or if they're big enough the gov't would bail them out

[kv968]

Some of the bonds in the secondary market do pay an interest rate higher than the current rates. They are listed in the Wall Street Journal but you need a broker to buy on the secondary market. There is, also, a book on Amazon that explains this better than me. It is called "Treasury Securities" by Donald Nichols. I guess this type of investment would only appeal to older, conservative investors.

Just keep in mind, generally the higher the rate, the higher the risk.