July 11, 2008, Newsletter Issue #126: Corporate Bonds
Tip of the Week
Include corporate bonds in your bond investing strategy to get the highest interest rates. Corporate bonds are bonds issued by businesses. These bonds are sold and traded much like stocks. Because there is a chance that the corporation may fold during the term of the bond, interest rates are often higher than for government bonds.
Junk bonds are a type of corporate bond issued by a company with a low credit score. Although interest rates for junk bonds are higher than for their conservative counterparts, the risk of default is also much higher as well. For this reason, it is best for most investors to stick with the traditional corporate bond.
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