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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

July/August 2024

Understanding Bond Funds

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Investors whose goal is to preserve capital may want to consider investing in bond funds,* which offer diversification while minimizing the risk of losing principal. Funds pay regular interest that can provide investors with a predictable income stream during retirement.


What Are Bonds?
Bonds are debt securities. When you buy a bond, you’re lending money to the bond issuer, which can be a corporation, a municipality or the government. In return, the bond issuer pays you interest for the bond’s duration. A bond fund holds securities from many different issuers, providing diversification and reducing the risk of default.


Bond Types
Bonds fall into three main categories:


Corporate bonds are issued by public and private corporations. Investment grade bonds have a high credit rating and low risk. High-yield (“junk”) bonds are from companies with a lower credit rating and a greater risk of default. Junk bonds pay higher interest to compensate investors for the increased risk.


Municipal bonds are issued by states, cities, counties and other government entities. They’re used to fund projects, such as roads, hospitals and schools, that benefit communities. Interest from municipal bonds generally is exempt from federal — and sometimes state and local — taxes.


Government bonds invest primarily in U.S. debt securities across a broad range of sectors, including Treasuries, government agency bonds and mortgages. Bonds are guaranteed by the U.S. government and present the least risk to investors.


Bond Risks
Bond funds typically don’t carry the risk that comes with investing in individual bonds. If one issuer in the fund defaults, there are many others to dilute the impact. However, investors should be aware that bond funds still have risks that could impact returns. Inflation risk occurs if rising prices reduce the purchasing power of bonds. Interest rate risk occurs when rising interest rates cause existing bond prices to drop.


Bond funds can be a good choice for providing retirement income. Your financial professional can offer guidance.


*Investors should read the prospectus and consider the investment objectives, risks, charges, and expenses of the fund before investing. Past performance won’t guarantee future results.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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