Barbara-- In 2001 when you had the actual bonds that were downgraded that you mentioned, did they default?
If not, and you held them to maturity, no money would be lost (unless you purchased them way above par value). That's the beauty of bonds (as opposed to funds and/or stocks). I also do all my own investing, but I'm mainly in bonds (not funds).
I recall that you mentioned CD's elsewhere. Well, you can buy (callable) CD's on the secondary market with coupon rates of 6.0%-6.5% (honest). On a good day, the price you pay for these is under 101% of par.
exc...There will always be bonds available for NCV to buy to maintain paying a good dividend. They will more than likely be below investment grade. While I wouldn't buy one individually, owning them in a group as in NCV doesn't bother me. Otherwise, I wouldn't own 6324 shares of NCV. We got burned when the tech bubble broke in 2001 cause we got caught owning investment grade bonds that ended up as junk bonds, namely Ga Pacific, Delta, etc. We lost 150000 before we were able to turn things around. At that time we used a full line broker. Turns out he did not know anymore than we did. After that we started doing our own investing. Best thing we ever did. Good luck to you. retiredafe8.
Why do you think that the payout is related to the NAV? Go to ETF connect and look at NCV's holdings. They hold mainly lower rated bonds and preferred stocks. The payout is related to the amount of income received by NCV from these holdings. If you check closer, you will find that these payouts are covered entirely by income received from these holdings.