Keep in mind that even non-investment-grade bonds rarely default, especially if they're not the lowest-rated bonds. So unless you're choosing the junkiest of the junk bonds - I'm talking about the rusted-out shell of a 1975 Ford Pinto of bonds - you can feel very confident you'll get your money back and finally earn a decent amount of income. Right now, I recommend investors buy bonds with maturities in four years or less. That way, their money is not locked up for a long period of time. I also recommend that you buy bonds only with the intent of holding until maturity. If a bond's price goes up, you can always sell at a profit if you choose. If it doesn't rise, you simply collect your interest and then your $1,000 per bond at maturity. There are lots of interesting opportunities in the bond market these days. For example, you can earn nearly 6% annually through an April 2024 bond from Ally Financial, a household-name financial services company. The bond is rated a safe BBB- by S&P Global Ratings. Even safer, the A- rated Credit Suisse bond that matures in August 2024 earns 7.5% annually. If you're willing to take on a little more risk, a BB rated bond offered by QVC, maturing in April 2024, earns you 9% annually. And one from the same company with the same rating but maturing in February 2027 earns more than 13.5% per year. Stocks come with no guarantee that they'll earn 13.5% per year, 9% or even 6%. But these bonds basically do. As long as the companies don't go bankrupt, bondholders will get paid $1,000 per bond at maturity. It's a great time to be a bond investor, and I expect it to get even better over the coming months as rates continue to rise and bonds offer investors even higher returns. If you're ready to diversify into some speculative higher-yielding bonds like the ones I mention above, check out my presentation here. I've identified an investment pays out contractually obligated returns of up to 110% in less than five years. It's the perfect recession-resistant investment. Here are all of the details. Good investing, Marc |
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