I have 40% of my portfolio in bond funds. Should I instead buy individual bonds to hold to maturity?
— Rick W., Concord, N.H.

With individual bonds, you know exactly what you'll collect every year and what you'll get back when the bond matures. A fund can't promise that. But buying bonds from a broker can be a problem. "The pricing you'll get is terrible," says Annapolis planner Ted Toal. Institutions buying millions' worth of the same bonds pay a far lower price.
To get a decent deal, pros advise investing a minimum of $10,000 to $25,000 per bond. You'd need a large six-figure portfolio, then, to buy enough bonds to limit your risk. "People are vastly more diversified in a fund," says David Hultstrom, a plan­ner in Woodstock, Ga.  For investing in U.S. bonds, he likes the Vanguard Total Bond Market ETF (bnd), which charges a low 0.11% of assets per year.

-- Kate Ashford

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