New Investor's Guide to Investing in Bonds

How to Invest in Bonds and Fixed Income Securities for Beginners

When you buy a bond, you are loaning money to the issuer. The issuer can be a wide range of entities such as the Federal government, your local school district, a corporation or even a limited liability company organized to build apartment buildings on a nearby street. The bond issuer is "renting" money from you and agrees to pay you interest until they have repaid the balance you loaned them. Bond investments are also known as fixed income investments because, as a general rule, they are considered safer than stocks due to the fact many bonds are backed by real collateral (such as real estate or fixed assets).

What Is a Bond?

What is a bond

Before we can get started talking about bond investing for beginners, you need to understand what a bond is! Discover the answer ... More

Bonds 101

Understanding bonds and bond investing

If you have ever wondered what bonds are, how bonds work, and why you might consider investing in bonds, this overview was written for you. It is a brief introduction to the world of bond investing and can help you understand how bonds are created and why some people are so passionate about investing in them.  Start learning about bond investing ... More

How to Invest in Bonds

Municipal Bond Certificate

If you are ready to add bonds to your portfolio, you may wonder where you should start. This overview breaks down the different classes of bonds that might appeal to you - savings bonds, bond funds, junk bonds, municipal bonds - and gives you a jumping off point for acquiring your own collection to generate interest income. More

Why Is the Interest Income I Earn from My Bonds Called a Coupon?

Why is bond interest income called a bond coupon

When you start collecting interest from your bond investments, you may hear the money you earn called a bond "coupon". There is a good reason for this term that you should probably understand ... More

How Much Of My Portfolio Should I Invest in Bonds?

What percentage of my portfolio should be invested in bonds

If you divide your portfolio among stocks, real estate, and bonds, what percentage of your money should you consider investing in bonds? There is a quick, easy and incredibly simple way to calculate an answer ... More

Is It True You Don't Have to Pay Taxes If You Invest in Municipal Bonds?

You don't have to pay taxes with municipal bonds in most cases

Yep.  The rumors you have heard are true, with some important caveats.  Tax-free municipal bonds let you earn interest income on your portfolio, help build your local community and avoid sending money to the IRS.  In fact, it was billionaire Ross Perot who was famous for earning millions of dollars per month in tax-free municipal bond interest without paying a penny to Uncle Sam.  Read all about tax-free municipal bonds and how you can take advantage of investing in them ... More

Why Are People So Obsessed with U.S. Savings Bonds?

Investing in United States savings bonds

There are all types of U.S. savings bonds, including Series EE savings bonds and Series I savings bonds. Each type, or series of savings bonds has its own rules, regulations, interest rates, and more depending on when they are issued. To get started studying these widely popular investments, visit our savings bond guide for new investors ...  More

Should I Invest in Individual Bonds or in Bond Funds?

Should I invest in individual bonds or bond mutual funds

Deciding whether to buy individual bonds or bond funds is a big decision. Both forms of bond investing offer their own benefits and drawbacks but there are a few considerations that might be more important when determining what is right for your own portfolio ... More

I Heard It Is a Bad Idea to Invest in Foreign Bonds. Is This True?

Is it sometimes a bad idea to invest in global bonds or foreign bonds

Is it stupid to buy foreign bonds? What are the dangers of foreign bonds? I put together this overview to explain why some financial advisers warn their clients to stay away from bonds issued by countries outside your native home.  You may be surprised at some of the potential pitfalls ... More

How Bond Spreads Can Hurt Your Pocketbook and Steal Your Money

Bond spreads can suck thousands or tens of thousands of dollars out of your portfolio

As a new investor, one of the concepts you're likely to hear about often is "liquidity". This term is an important one and if you take the time to understand why it's important, it can make or cost you a lot of money. This is especially true if you invest in bonds. Due to the way the bond market is structured, the low liquidity in some bonds can actually cost you tens of thousands of dollars when buying or selling investments! These little-understood bond spreads are waiting to steal your money if you aren't careful ... More

Avoiding the Allure of Junk Bonds

Money falling from briefcase of running businessman
Avoiding the Allure of Junk Bonds. Gary Waters / Getty Images

Junk bonds can be a huge temptation for new investors. Huge interest rates in the double-digits. Dollar signs flashing before your eyes.  Yet, junk bonds have a very dark side ... More

Bond Duration - One of the Biggest Hidden Dangers You Face

Bond duration can cause your bonds to crash even further than stocks if you aren't careful!

Many bond investors have no idea what bond duration is.  In fact, I know of one investor who owns millions of dollars worth of municipal bonds and had no idea the risk lurking in his portfolio due to the excessively high bond duration.  Take a few minutes to find out what this potentially huge problem is and how to find out if you are vulnerable ...