As debt securities, bonds can provide excellent diversity to your investment portfolio. They represent money borrowed by a corporation (or government or municipality) to fund expansion, construction, and other growth-related projects. You are the bond investor, who holds an IOU from the borrower indicating you are entitled to recover your money with a specific rate of interest at a specific point in time.
Bonds are sometimes overlooked by investors for no good reason. Take the time to acquaint yourself with the types of bonds available including corporate, municipal, and government. You may find that adding some debt securities to your equity-based portfolio makes sense for your overall objectives. Here are some helpful articles to get you started:
How do bonds work and what type are available? What's the least you need to know if you're considering investing in them?
What are coupons? What determines a bond's maturity date? Gain a clear understanding of the terminology that bond traders use and how it relates to your investments.
As with any investment, bond trading has its own set of risks. Explore the different scenarios that can lead to devaluation of your investment and find out how to balance risks with rewards.
When investing in bonds, you'll want to understand and use asset allocation. Your investments can vary, depending on where you are in your working life, as well. Discover bond trading strategies for different financial objectives.