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Bond investors can diversify risk by purchasing
bonds from different issuers with different maturities.
Treasury securities are available in $1,000 increments, but the minimum
purchase for municipal and corporate bonds can be $5,000 or more. The cost
of buying a bond includes a commission or a ?markup? on the price, depending
on whether you are buying from a firm acting as an agent who is getting the
bond from someone else, or as principal, meaning the firm owns the bond it
is selling.
Executing an effective diversification strategy requires a significant
minimum investment to start. While there is no absolute requirement, a rule
of thumb says it often takes at least $10,000 or more to build a fully
diversified bond portfolio.
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