Tax rates and purchasing fixed income assets with the lowest fee fixed income index funds
Exclusively buy bond assets using low cost bond and fixed income index mutual funds
Fixed income trading is a very complex investment process that individuals ought to leave to professional fixed income and bond index fund investment portfolio managers. The pricing of fixed income and bond assets is substantially more complex than the trading and pricing of common stocks.
In addition, bond pricing is substantially less transparent, and fixed income and bond assets and the bond markets have very substantial price spreads. From a realistic perspective, you buy bond and fixed income assets at “store” costs and dispose of fixed income and bond holdings at less advantageous wholesale prices which very much favor the fixed income and bond market investment bankers.
Personal investors would do better to comprehend more about no load bond mutual funds
Fixed income and bond trading security market pricing is substantially different from the market for stock assets. A publically traded company most often has only a single kind of stock. On the other hand, this same public company could have tens, even hundreds, of distinct outstanding bond and fixed income investment instruments. Relatively few individual investors possess the necessary skills, know-how, and experience to assess fixed income and bond investment securities prices. Fixed income and bond investment instruments possess differing valuation characteristics than do common stock securities. Moreover, issued and outstanding bond and fixed income securities need differing price setting methods.
Stock investments provide the investor a claim to a portion of the market value of the publically traded company and to dividend payouts, if the Board of Directors declares any such dividend payouts. In contrast to common stock asset securities, corporate fixed income assets allow their owners a senior ownership right to the public company’s cash flow to pay fixed income asset principal and interest payments. If bondholders’ rights to the publically traded company’s cash generation are not satisfied, then default may happen.
A publically traded firm might be forced to liquidate in bankruptcy, and all equity ownership could flow to the bondholders and creditors. Such bankruptcy events usually are very difficult, distasteful and slow events.
These concerns are called the risk of default. Projections concerning the varying likelihood of failure to repay could cause substantial price differences for bond assets which otherwise might have the same pricing. Estimating whether fixed income and bond payments would reliably be paid by fixed income and bond issuing firms during the term of the fixed income asset is better left to highly experienced professional fixed income and bond market index fund investment portfolio managers.
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