NEW YORK (CNN/Money) - If you want to invest in bonds, are you better off buying individual bonds or bond mutual funds?

There have been several classic debates that have raged down through the ages. Is there or is there not a God? Do humans truly have free will? And, of course, the most challenging of them all: Which is better -- individual bonds or bond funds?

Alas, even the greatest philosophers and most enlightened Zen masters can provide no definitive answer on this query, grasshopper. But, as a mere financial journalist, I am willing to take a stab at giving some guidelines on how individual investors might choose between these two investment alternatives.

Let's start with bond funds. Their main virtue is convenience. You don't have to sift through different bonds from different issuers to see which is a better deal, nor do you have to do fundamental research like poring over prospectuses, offering documents, bond indenture agreements and the like to see how well your investment is protected inthe event of financial trouble down the road. The fund manager does all that for you, plus the fund regularly provides performance figures so you can compare how good a job your fund is doing vs. funds that buy similar bonds.

You also don't need much money to invest in bond funds. Most require a minimum investment of $1,000 or less, and you can typically make subsequent investments of $100 or so. And then there's the question of what to do with the interest payments that bonds throw off. If you own your bonds through a bond fund, you can elect to have those interest payments as well as any capital gains your fund might distribute automatically reinvested in additional shares of the fund. It's all very neat, clean and easy to handle.

Of course, this convenience has a price. You've got to pay the fund manager for picking the bonds and overseeing the portfolio. And you've got to pay the fund company for administrative chores such as keeping track of how much you've invested, reinvesting your dividends and capital gains, providing account statements and generating semi-annual and annual reports. Generally, bond funds charge about 1 percent a year or so of the amount you have invested for these services, although that figure -- which is known as the fund's "expense ratio" -- varies from fund to fund.

By doing a bit of shopping, you can find funds that charge less than half this amount. If you buy a bond fund through a broker or other sales person, you may also have to pay a sales commission or load, typically about 3 percent. You can check out the expenses on an individual fund and compare expenses from fund to fund by going to the Fund section of Morningstar's site.

Now let's move on to individual bonds. Here, one of the big advantages is that you don't have to pay that annual expense ratio. By sidestepping that charge you might be able to add an extra 0.5 percent to 1 percent year to your return. Notice I said "might" rather than "will." That's because individuals buying bonds in small quantities don't get as good a price as fund managers who buy in large amounts. And in the bond world, anything under a $1 million purchase is considered a small quantity. So if you don't know what you're doing and you're not a careful shopper, you might overpay for your bonds, thus wiping out the advantage you thought you'd gained by not paying the fund's expense ratio.

You also gain more control by owning individual bonds. You decide exactly which issues to buy and when to sell them, as opposed to having a fund manager making that decision for you. The question here, of course, is do you understand bonds enough to make reasonable investment decisions? Do you understand the relationship between bond prices, interest rates and varying bond maturities? Are you aware of the ramifications of buying a "premium" bond versus one selling at "par"? Do you know what a "call" feature is and how it affects your potential return? If not, you're probably better off in funds.

Even if you do feel you understand enough about bonds to buy individual issues, there's also the matter of what you plan to do with the interest payments you receive. If you own only a modest amount of bonds, say, $10,000 worth, then with current yields of about 5 percent or so, your bonds would throw off $500 a year in interest. If you plan on spending that income, fine. But if you would like to reinvest it in more bonds, you won't have nearly enough to buy another bond. In a bond fund, by contrast, any payment, no matter how small, can buy be reinvested in new fund shares.

If you want to invest in individual bonds, the easiest way to do so is to buy newly issued Treasury bonds directly from the U.S. government via Treasury Direct. This program charges no fees or commissions to small investors and lets you invest as little as $1,000, although I don't think it would be worth going to the trouble to sign up just to buy a few thousand dollars' worth of bonds.

The advent of online bond brokers has also made it easier to shop for corporate and municipal bonds. To increase your chances of getting competitive prices among these issues, however, you should be prepared to invest at least $10,000 -- and in some cases $25,000 -- in each bond issue you buy. Assuming you want to hold a diversified portfolio of bonds -- and I think you should, otherwise a default could be devastating -- that means investing upwards of $50,000 or more in five separate issues. If you're not prepared to ante up that kind of cash, my advice is stick to funds.