Investing in bonds isn't likely to produce the level of excitement that accompanied investing in stocks in the bull market of the 1990s. You won't see double-digit returns on the money you put in. But you're not likely to see the double-digit losses that stocks have provided in the past couple of years either.
What bonds can provide in an investment
portfolio is the combination of steady income and return of principal that's reassuring for any investor — plus an opportunity for investors who are willing to take a slightly greater risk to achieve a stronger return.
The worst mistake you can make is to think of bonds as one big, monolithic investment category. There are super-safe, insured
AAA-rated
municipal bonds at one end of the scale and risky issues without ratings teetering on the edge of default on the other. There are bonds that
mature
in a month and others designed to last 100 years.
Alexandra Lebenthal, President and Chief Executive Officer of Alexandra & James Inc.
