Want to Buy Foreign Bonds Directly? Good Luck

The yields on debt issued by governments overseas trump what you can get from U.S. debt. But you need to be a millionaire to tap that market.

I often advocate buying individual bonds rather than mutual funds. Assembling your own portfolio of bonds is easy to do, especially if you're dealing with relatively simple and safe bonds (that rules out junk bonds, some mortgage securities and other esoteric debt instruments).

If you buy bonds directly, you know you'll get your principal back when an issue matures, assuming the borrower of your money doesn't go bust. You'll save on management fees, and you won't have to worry about some fund manager misusing derivatives. It's easy to buy government bonds through Treasury Direct, and you can buy municipal and corporate bonds through such brokerages as Fidelity and Charles Schwab.

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Jeffrey R. Kosnett
Senior Editor, Kiplinger's Personal Finance
Kosnett is the editor of Kiplinger's Investing for Income and writes the "Cash in Hand" column for Kiplinger's Personal Finance. He is an income-investing expert who covers bonds, real estate investment trusts, oil and gas income deals, dividend stocks and anything else that pays interest and dividends. He joined Kiplinger in 1981 after six years in newspapers, including the Baltimore Sun. He is a 1976 journalism graduate from the Medill School at Northwestern University and completed an executive program at the Carnegie-Mellon University business school in 1978.