Target Maturity Bond Funds

I’ve never cared much for bond funds. They never mature. Their NAV is at the mercy of Federal Reserve policy.

I like how individual bonds mature and return my investment, but I don’t want the risk of owning individual issues.

I nearly brought this question up in Mark Corothers ‘Flipin’ post, but didn’t want to send his discussion about real bond returns down the wrong rabbit hole.

So here goes. I have a CD ladder to protect me from a lost decade. I had never heard of Target Maturity Bond Funds (TMBF) until a reader asked me why I used a CD ladder instead of TMBF. His bond ladder was earning about 4.75% vs my CD ladder’s 3.8%. As the CDs in my ladder mature I plan to replace them with TMBFs.

Is there any reason why the Target Maturity Bond Funds wouldn’t also be appropriate for the bond holdings in my IRAs?

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