Circumstances have conspired against the confidence people have traditionally placed in the bond market. Investors have been jumping ship for months now - basically in search of some place to park their money where they believe it will be safer, and somewhere where they hope they can get better yields. "DM Intl." While those are admirable goals, to completely give up faith in the bond market that offers a fixed income is not exactly sound financial thinking. If what you are interested in is a diversified portfolio and a guaranteed income, there are few investments that offer you the kind of dependability that the bond market does. If that is, you know where the right investments are.
You can't really blame the investor for being wary of the bond market today: the Fed interest rates are going to rise. Undoubtedly so. And everyone's worried about how states and local governments that owe investors the sums assured on these bonds are ever going to make good on their obligations. Muni bonds especially are particularly viewed with suspicion. Investors are fleeing this particular market. Still, you need to remember that the bond market doesn't collapse in quite the way the stock markets do. The last time anything like that happened to bonds, it was 40 years ago. And even then, the bond market fell by less than half the amount that the stock markets did back then. Today, a good place in the bond market in which to invest your money would be in bonds that mature in no more than five years. That's to make sure that any rise in the fed's interest rates don't affect your bonds. For the most shelter from rate increases, you're supposed to choose anything other than low yield treasury bonds. The ones with higher yields are the most protected from any rate hikes. Here are a couple of those high yield bonds that you might be interested in.
In a muni bond market where investors are constantly worried about the ability of the issuing authority to fulfill their obligations, fund managers are really loving municipal revenue bonds. These are bonds that are issued to fund a specific government project - such as the building of a bridge, a university or an airport. Certainly, there is an element of risk attached to revenue bonds. If the project doesn't make the kind of income that the government hopes for, those who hold those bonds could be in trouble. Still, invest in revenue bonds that fund basic infrastructure, and you should be golden. That's the way it's always been. If your bonds are ones that fund the laying down of a water line or the building of roads, that kind of basic infrastructure always pays off.
The corporate bond market is a pretty safe bet too, today. They are generally not all that affected by any interest rate changes. What with the economy improving and companies coming back with strong individual performances, corporate bonds by companies that deal in basic infrastructure can be a great bet.
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