- 1). Shop around at local banks and credit unions and gather information about the certificates of deposit they offer. Building a ladder of CDs within your IRA is a good way to save for a comfortable retirement without putting your hard earned money at risk. As long as the bank you use is FDIC insured, or the credit union is insured by the NCUA, your CDs are insured up to $250,000.
- 2). Contact several mutual funds and ask for prospectuses for their Treasury bond funds and high grade corporate bond funds. Avoid so-called high yield bond funds, since they are filled with low grade bonds that are more subject to default and loss. High yield bond funds are also known as junk bonds.
- 3). Check the average maturity of each bond fund you are considering. One risk of bond funds is that the net asset value can decline when interest rates rise. If interest rates are at all time lows, look for a bond fund with an average maturity of no more than three or four years.
- 4). Review the performance of the bond mutual funds you are considering, as well as the fees and expenses associated with each option. Since the yields on bond funds tend to be lower than stock funds and some other investments, high fees can really eat into your return.
- 5). Complete the application for the mutual funds you want to invest in. Submit those completed applications, along with your initial deposit for each fund, to the address listed on the form. Consider setting up an automatic monthly transfer from your bank account to the bond funds to help you build a retirement nest egg more quickly.
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