NEW YORK (CNN/Money) - I'm 53 and thinking of semi-retiring in a year or so. Do you think I'd be better off buying individual corporate bonds or bond funds?

-- Anthony Traversi, Stamford, Conn.

In theory, I'm a proponent of owning individual bonds rather than funds. When it comes to the real world, however, I'm not so sure it's a good idea for most individual investors. Let me explain.

Investing directly in bonds has several advantages over funds. First of all, you don't have to pay a bond fund manager to oversee the portfolio which, depending on the expense ratio of the bond fund, can easily save you a half a percentage point or more a year. When you consider that bonds are now yielding in the 3 to 6 percent neighborhood depending on maturity and quality, picking up half a percentage point is considerable.

Another plus of direct ownership is that, barring default, you know that, whatever interest rates do in the meantime, you'll get your original investment back when the bond matures. You don't have that assurance with a mutual fund. If rates rise after you invest and stay high, you may not get the full value of your original investment.

Finally, buying individual bonds gives you more control over what you own. You pick the bonds that go into your portfolio. You decide whether or not those bonds stay. When you buy a bond fund, the manager makes those decisions on your behalf.

These advantages come with some considerable potential down sides, however. For one thing, individuals buying and selling small lots of individual bonds (and under $1 million is a small lot in the bond world), don't get very good prices. The higher the markups that individual investors pay cuts into their yield, which erodes some of the cost advantage I mentioned above.

And while many people tend to think that investing in bonds is much simpler than investing in stocks, I don't believe that's the case.

In fact, the world of bonds can get pretty complicated and picking individual bonds can be downright tough. You've got to understand concepts such as call features -- i.e., the ability of the issuer to repay certain bonds before their stated maturity date -- and what those features mean to a bond's potential long-term return.

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You've got to understand the concept of duration and what that means for risk. You've got to understand the various credit ratings that firms like Standard & Poor's and Moody's use to judge bonds, and how those ratings relate to default risk and yield.

And you've got to know how to put together a portfolio of issues that's diversified not just by maturity but by different sectors or industries.

One other thing: most bond funds make monthly payments, which is nice and convenient for anyone living off bond income. Most individual bonds, however, make semi-annual payments, which means you'll have to also diversify your portfolio by payment dates if you want to create a monthly income on your own.

Is it doable? Sure. But creating your own bond portfolio as opposed to investing in a bond fund requires more thought and attention on the part of the individual investor.

It also requires more money. In general, I'd say you need at least $20,000 to create a cost-effective diversified portfolio of corporate bonds. Which means that, unless you intend to limit yourself only to corporates (which I don't recommend), you should have more than twenty grand to invest in bonds alone.

If you do decide you're up to the rigor of buying individual bonds, the good news is that there are a lot more places than there were even just a few years ago where you can get information about specific issues and about building a portfolio.

I'd recommend that your first stop should be theInvesting In Bonds site, where you'll find lots of good statistical information about current prices and yields for various types of bonds. From there, you might want to check out Bond Village, a site that can provide valuable insights into what's going on in the bond market and where the better values might be.

Finally, a growing number of mutual fund and brokerage sites -- including Vanguard, Fidelity, Tradebonds.com, TD Waterhouse and Harris Direct -- now offer individuals the ability to screen for specific bond issues on the basis of yield, credit quality, maturity and other factors.

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This can help you identify individual bond issues you might consider investing in and in some cases even presents the possibility of finding out where you can get a specific issue for the best price. Several companies, including GMAC, UPS and Freddie Mac to name a few, have even begun marketing their bonds to small investors by offering features such as low minimums and monthly payment dates through programs such as LaSalle ABN AMRO's Direct Access Notes program.

But if all of this seems less like an opportunity and more like a hassle you'd rather skip, then I'd say bond funds are probably better for you, in theory and in reality.

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "We're Not in Kansas Anymore: Strategies for Retiring Rich in a Totally Changed World." He also answers viewers' questions on CNNfn's Money & Markets at 4:40 PM on Mondays.