6min chapter

Money For the Rest of Us cover image

Bond Investing Master Class - How to Invest in Fixed Income

Money For the Rest of Us

CHAPTER

Bond ETFs - Bond Funds and ETF's Duration Can Make a Big Difference in the Return

The iShares i-bond December 2025 term treasury ETF has a yield to maturity of 4.08 percent if you bought that fund right now held it until December 2025 your annualized return would be close to 4.08percent. A hybrid vehicle known as bulletETFs mature on a specific date in the future and they are more protected from default risk than individual corporate bonds. If we hold the fund for seven years or more we will earn that whatever that starting yield or maturity was when we invested but there's an important caveat: interest income needs to be reinvested at that starting yield tourity of at least two percent.

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