Build your investment ladder with corporate bonds
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Of course, you're paid a higher yield for taking on the risk of a callable bond. If that higher yield is appealing to you, sprinkle your ladder with a few callable bonds, but keep the majority noncallable to offset the risk.

Typically, you could build a ladder with bonds maturing every couple of years, stretching out, perhaps, to 10 years. When the two-year bond matures, the 10-year bond is then due in eight years, so you buy a new 10-year bond with the proceeds from the matured two-year. You're always buying the longest bond and reaping the rewards of the higher yield.

You won't pay an obvious fee for buying or selling one of these bonds if you hold until maturity, but there is an embedded sales charge that's already been taken out of the interest rate.

You should plan to hold these bonds until maturity. While a broker may be able to sell your bond on the secondary market, there is limited liquidity, according to Ricketts.

"It's not liquid like the Treasury market. There's not the huge liquidity that you find on a very large corporate issue or government issues. These aren't trading vehicles."

Because of the way InterNotes are sold, it can be difficult to tell if you're getting the best deal. You could see what other Bank of America bonds, for instance, are selling for at that particular time and at what yield.

If you were buying on the secondary market, you might have to pay a premium if the bond's yield was higher than the current yield. Similarly, you could be missing out on buying a bond at a discount if the bond's yield were lower than prevailing yields. You could also find yourself liable for paying accrued interest to the seller.

"If you had a good broker, you might be able to do better," Ricketts says. "But if you're buying just $10,000, nobody gives you a good price. The process is not built for the individual."

Before buying, you might want to check to see what Treasuries with similar maturities are yielding. You'll want to make sure you get a higher yield to account for the added risk of a possible default by a corporation.

Buying individual bonds in this fashion can beat the return you'll get with a bond fund. You sacrifice the bond fund's liquidity, but avoid the load and ongoing fees bond funds often carry. If you hold the individual bond until maturity you'll avoid the potential risk of loss of principal that comes with bond funds.

An interesting feature of InterNotes is the survivor benefit, which allows your heirs to return the bonds to the issuer at par without waiting for them to mature.

Unlike CDs, corporate and government agency bonds are not FDIC-insured.