| Creating wealth will probably involve the purchase | | | | investment for those anxious about the volatility |
| and inclusion of bonds in your investment portfolio. | | | | of stocks. Creating wealth requires making |
| When you purchase bonds, you are lending the | | | | investment decisions based on current market |
| bond issuer your money in return for a fixed rate | | | | trends. |
| of return on their investment. Bonds are known | | | | The values of stock shares are not fixed like |
| as fixed-income investments, the investor is a | | | | bonds. The value of stock shares go up and down |
| creditor of the company. | | | | contingent on what is happening in the stock |
| Issuers of bonds can be corporations, the federal | | | | market and the company whose shares you |
| government, cities or states. The interest paid on | | | | have purchased. With stocks, you are not a |
| bonds is generally paid quarterly, payment on | | | | creditor you are an owner. Your plan for creating |
| some bonds however occur on the date when | | | | wealth may involve purchasing stocks, bonds and |
| the bond matures and the borrower gives you | | | | mutual funds as part of a fully diversified |
| payment on the principal amount of the loan. | | | | investment portfolio. |
| Bonds issued by the U.S. Government are known | | | | Bonds are rated for risk or safety by bond rating |
| for being exceptionally safe investments. Municipal | | | | companies like Moody's, A.M. Best, Standard and |
| bonds, corporate bonds, bonds issued by states | | | | Poor's. Bond rating companies assign each bond a |
| and cities can be considered safe or referred to | | | | grade between A-C, "A", indicating a low risk or |
| as high-risk investments. Bonds issued by a city | | | | "C", indicating a high-risk investment. The assigned |
| or state does not guarantee your investment or | | | | bond grade is an indication that the issuer of the |
| their safety. Creating wealth does involve some | | | | bond is likely or not to pay the principal and |
| informed risk after diligent research has been | | | | interest as agreed. High yield bonds are bonds |
| performed. | | | | with a high interest rate and are referred to as |
| Your interest is locked in when you purchase | | | | "junk-bonds". The use of the word junk, attached |
| bonds, and that is the risk you take when you | | | | to bond should indicate some type of warning |
| buy bonds. Bonds in your investment portfolio | | | | regarding the risk. Be sure to do your due |
| may be locked-in at a lower interest rate while | | | | diligence before making any kind of investment |
| the interest rates in the market are increasing or | | | | decision. |
| rising. However, they may be a more comfortable | | | | |