Last week, I suggested that even yield hogs should avoid junk bonds. That, however, was just a warning against trap number one. As you scour the investment universe looking for alternatives, sooner or later you’re likely to encounter a whole different and for many, lesser known set of traps; closed end funds. Not all are bad and some may be pretty good. But it’s essential that you visit the web site for each fund you consider and that you study the literature, especially the part about “distributions.” If you can’t find what you’re looking for, then stay away from the fund.
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