Investment Q&A

Studying bonds can be a bit intimidating at first considering the types of bonds available with different maturities, coupon rates, and credit ratings. Investopedia is a great starting place for beginners. The link above is a bond primer. With peak interest rates (probably) soon upon us, we think bonds are poised to do better. We think XBB, CBO, XHY, and XLB would be good ways to participate in this sector. We prefer exposure to bonds via ETFs. Generally, the least riskiest bonds are short term government obligations. Long term bonds have more sensitivity to rates. So, as one moves away from government bonds to corporates to weaker corporates risk will increase. Same with maturities: longer dated bonds are more volatile. So for new entrants, we would first suggest a mix of maturities. Corporates are fine but again a diversified mix of quality credits will be less stressful than junk bonds.