Debt Fund

There is a saying on Wall Street that runs, “stocks are for people trying to make money, while bonds are for people trying to keep money.” Something like that, anyway. Over time, stocks have returned, give or take, 10% a year with dividends reinvested, but have showed high levels of volatility along the way. Bonds have been much steadier, returning something like half that number with way less uncertainty.

Buying a fund of bonds is easy, but creating that fund on your own as an individual retail investor is...expensive. Or rather, it takes a fair amount of cash to buy, say, 20 different bonds with different risk profiles, duration, and other factors.

Why? Because the par value of a bond is typically $1,000. So to create even a modestly diversified fund would require an investment of, give or take, 20 grand. Buying a debt fund, or rather, a bond fund, takes way less. In fact, most bond mutual fund companies have minimums of around $250 to get started. Way easier to get invested.