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Bond InvestingBonds are a great way to protect your principal and set up a steady stream of income. They are usually much less volatile than stocks in the short-term, which is why conventional wisdom says you should gradually increase your bond holdings as you approach retirement. But all bonds are not created equal, and this page is designed to help you sort out the differences. Visit our Investing Strategies page for guidance on how to create a personal investing plan that includes both stocks and bonds.
When you see a title of interest, click on it to view the complete article. (Note that links with the key symbol [  ] are locked to visitors and available to Web Members only.) Investors often believe the returns from their bond funds are lower than they actually are. The cause of this confusion is usually their reinvested monthly dividends. We walk through an example illustrating how this typically occurs.
When interest rates start to rise, savers who have money tied up in CDs or bond funds often get locked into below-market rates. If you play things right, however, the sting of below-market returns should pass quickly.
Relative to other kinds of bonds, Treasury Inflation Protected Securities should hold up well in the face of inflation. But as rates rise, holding TIPS won't necessarily protect you against losses.
Interest rates have been driven to dramatic lows by both a long-term bull market in bonds and the Federal Reserve. But when the pendulum swings back the other way and rates begin to rise, bond investors will face a tough challenge. It's not easy to earn a decent return on bonds in a time of rising rates. To help you prepare, this month's feature article explains the basics of the bond market, including the factors that influence risk and return. And you'll learn about the best kind of bonds to hold when rates start to climb.
"Ginnie Mae" funds tend to offer returns about 1% per year higher than funds invested in high-quality short-term bonds. But be warned: this road to better yields can be a bumpy one.
Short-term bond funds pay higher yields than money-market funds and accounts — but they can suffer temporary losses when interest rates fluctuate. Still, it's rare for a short-term bond fund to lose money over a two-year period. That's what makes these funds good vehicles for longer-term savings.
Buying individual bonds would seem to be a good way to avoid the risk of rising interest rates that is present when investing in bond mutual funds. But can an individual build a personal portfolio of individual bonds without a detailed knowledge of the bond markets? Thankfully, given some of today's readily available tools, the answer is yes.
With money-fund yields scraping bottom, millions of savers have moved up the risk ladder to bond funds. Should you?
In a lingering low-interest rate environment, preferred stocks offer a way for yield-hungry investors to boost their income.
Unhappy with low yields in your fixed-income funds? You're likely to find better yields overseas — but not without higher risk and greater complexity.
At last: A tool for bond investors to help you build a bond portfolio by balancing risk (the worst case you're willing to accept) and reward (average annual returns).
SMI's model portfolios were back on the winning track in 2009, with both Upgrading and Just-the-Basics beating the overall stock market. Plus, we break down the wacky year in the bond market.
Investors buy bonds for safety. But bonds are quite vulnerable to a specific risk that is starting to pop up on investors' radar screens: inflation.
The U.S. has enjoyed relatively low inflation for so long that the inflationary economic pain of the 1970s has been largely forgotten. But many economists say current government policy is a recipe for renewed inflation — perhaps at a level rivaling or exceeding the 70s. If high inflation returns, what kind of investments will offer the greatest degree of protection? Which are most likely to suffer loss? We evaluate the likely winners and losers of a potentially inflationary future.
The corporate and municipal bond default phase of this credit crisis hasn't started yet, but it will. When it does, expect high-yield bonds to be hit hard.
Series EE bonds have a guaranteed payout — if you hold them long enough. But EE bonds have some serious downsides as well.
Stock investors have a number of helpful tools to measure risk, like standard deviation and SMI's relative risk scores. Similar tools exist for bond investors as well. We examine one of the best and explain how to apply it when selecting bond funds for your portfolio.
The way you divide your portfolio between stocks and bonds has a bigger impact on your eventual returns than any other single decision. Has the difficult first half of 2008 driven you out of stocks? Or are you persevering, trusting the traditional superiority of stocks will once again reassert itself? In this article, we look at historical patterns and how they can be used to guide your portfolio allocations as you plan for retirement.
Load vs. No-Load. Class A, B, C, R, Y, Z…what does all this mean? Selecting mutual funds can be confusing, but by learning just a few key principles, you can cut through the maze of confusion and find exactly the right funds for you. We deliver the basics you need to know about mutual fund types and share classes.
Each January we update our category allocations based on where we think the best opportunities lie in the year ahead. See what fine-tuning we suggest to take advantage of opportunities in the New Year.
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