61 and have killed it the past few years. It is time I diversify a bit and get into some bonds. This is based on some reviews with advisors and what I have read.
I need to pick some "quality bonds". From a search, a "quality bond is issued by a company that has a good credit rating".

Is there a good way to pick bond funds to help diversify my portfolio? I have used a bank rating web site to pick CD's to buy. Is there something similar?

My 401K has three options:


And my Rollover IRA has a bunch of options.

Appreciate the input.

Well not in your retirement accounts specifically but in regards to your CDs have you seen treasurydirect.gov? You can get 5%+ pretty easily.

For bonds in retirement funds I'd stay away from credit risk to the extent possible given the spread for junk and stick government short term.

You might want to bulk up some I bonds too, lots of rules there but also treasury direct.

Without knowing the specifics of what income you plan to use after retirement, it is difficult to establish what your actual goals are.  

In my case, I found a wealth manager, a true fiduciary.  I told him I want to retire yesterday and have guaranteed income for the rest of my life, regardless of social security.  

Their team set up 4 accounts, two for me, two for my wife, each with specific investment strategies.  After the dust settled, two more accounts were set up with a guaranteed income stream.  

I am set, done, and I am not trying to play any more games with investments or the newest pretty thing.  

You are doing the right thing to find out what is out there, but I would suggest that arfcom isn't the best place for that.  

Before I figured things out, I had bonds to park money.  That was the first thing I dumped. I also liquidated my Etrade and rolled my Chase IRas.  

Interview some wealth managers, it is usually free.  Attend a seminar.


ETA: the percentages you listed for 401k in that form are laughable.
ETA2: I really wish I had done all of this when I was 40.

Sat down with a guy smarter than me this afternoon. I'm doing well with T-Bills and CD's. Will keep this going while the rates are where they are.

Thanks,

This interests me and a few questions if you don't mind.

What is your age/wife?
Are you withdrawing a fixed dollar amount per year or have a budgeted number to withdraw? or are you taking as you need funds?
Is your networth "two commas" or "one comma"?

My perspective is bonds are for safety, not gains.  Equities are where you gain or lose.  Bonds moderate the market swings.

I use low cost, broadly diversified bond funds like BND, VBTLX, and their Fidelity equivalents.  I do not look at recent returns to pick - I go by expense ratio (what they charge you to be in the find, expressed as %, good funds are 0.03 % or so.

You can earn higher short term returns by laddering CD's at a bank or S&L.  Not sure you can do CD's in a brokerage or tax advantaged retirement account.

Consider setting an asset allocation plan - a % of each asset class you want to invest in.  I keep it simple with US and Intl equities and bonds.  Other folks like gold, commodities, real estate stuff like REITs.  Lots out there.

You can purchase CDs for a retirement account, at least at E*Trade.  I usually use T-bills  when I want some thing short term, which is rare for me.  I use T-bills in my taxable account.  A lot will depend on state taxes.

Many feel bonds are somehow a "safer" investment than stocks as they take some of the volatility associated with owning stocks or stock funds out of the equation.  THIS IS NOT TRUE!   Bonds and bond funds can appreciate or depreciate depending on market conditions.  Their value is inversely corelated to the interest rate of the day.  Meaning:

You bought a newly issued $1000 Bond maturing in 10 years yesterday which paid 4.518% interest.  If interest rates suddenly start to go down, the value of your bond will go up.  Your interest rate stays the same, but what you could sell the bond for on the secondary market goes up.  The opposite is also true.  If interest rates go up from the time you bought your bond you could actually lose money if you were forced to sell it.  Afterall who would want your bond when they could buy a new one at a higher interest rate?  

Think about all those people who bough 10 year bonds during COVID when interest rates were super low.  They have to hold their bonds to maturity or face taking a huge capital loss.  What bonds do do for you is give you a fairly predicable cash flow assuming you buy bonds with a good credit rating.  You can plan of using the interest payment often referred to as the coupon to pay bills.  Afterall, a bond payment is guaranteed by the issuer not to change unlike a dividend which is subject to change at the whim of the board of directors.  

Here are a few general rules of thumb to think about when buying bond or bond funds:

1.  Interest rate paid on a bond is a direct reflection of the risk you assume as the bond holder.  That could be credit risk or duration risk.
2.  The longer the time of the bond to maturity, the greater the volatility risk you accept.  A 3 month treasury is a lot less volatile than a 10 year treasury.  
3.  The credit markets can and do behave differently than the equity markets BUT just cause one is up doesn't mean the other is down.
4.  You shouldn't time the bond market just like you shouldn't time the stock market.  Investing should be a long journey not a short trip.
5.  Newly issued bonds are only worth their face value twice in their lives, once at birth and the second time at redemption.  The rest of the time they will vary in value given current market conditions.


I wish you good luck in your journey

Very true!  Also, very difficult for some people to comprehend.  If you own bonds, you are subject to changes in both inflation and interest rates.  Bonds have their place, but they are definitely not safe.