One of the nice things about bonds (and CDs) is you know what you’re going to get back. Of course, any bond other than US government bonds has a risk of default… but if they don’t default, you get interest on a schedule, and you get your money back at the end at maturity.
It’s “semi-easy” (lots of opaque jargon in the online dialogs) to buy US Treasury bills, notes, and bonds from one of Clark’s favorite discount brokers. But there’s no way normal people can buy enough of the riskier bonds (corporate, high yield, emerging market) to be adequately diversified. A bond is $1000 face value. You need ~50 to be diversified. And you need time and bond expertise to shop for the 50 that are suitable for you. See? It’s not really for the little person. Not for me, for sure. So buy an ETF?
But the problem with bond ETFs and mutual funds is… there is no fixed maturity date… the funds just roll into new bonds as old ones fall off… which means that you don’t really know what you’re going to get whenever you decide to sell. You could have a capital loss, which could be upsetting.
But there are some ETFs with fixed maturity dates, called BulletShares from Invesco. They sell corporate, high yield, emerging market ETFs which mature and end in mid-December on a variety of target years. That’s how you can get your riskier bond exposure, higher yields, yet be able to budget what you will get back (with some default risk) at maturity.
Bulletshares Corporate 2026 ETF (BSCQ) has a yield-to-worst (YTW) of about 4%. So if an investor buys and holds to mid-December 2026, they will experience a 4% return. Bulletshares High Yield 2026 ETF (BSJQ) has a yield-to-worst (YTW) of 7.35% but note, it’s a collection of JUNK BONDS.
Ally Bank CDs pay 2.25% going out 3-5 years
US Treasuries pay 2.64% for 3 years, 2.74% for 5 years.
Bank products are being left behind right now. It’s not always the case, but it’s true now.
How to buy Invesco BulletShares? Through one of Clark’s favorite discount brokers.
Finally, everyone’s new darling, for which there are other posts on this community: US Savings Bonds Series I (you can only get through TreasuryDirect)
**NEWS:** The initial interest rate on new Series I savings bonds is 9.62 percent.
DISCLOSURE: I do not work for INVESCO or any financial firm. This post is not compensated in any manner. I am a happy customer of Schwab (33 years), Fidelity, and Invesco Bulletshares, and sort-of happy customer of US TreasuryDirect (the interface is awful, but I like the I-Bonds).