Investing Tip #182: Remember The General Rule When Buying Bonds

Remember the general rule when buying bonds -“lower rating means higher risk and so higher returns.”

Bonds are rated by credit rating agencies Moody’s, Standard & Poor’s and Fitch.  Ratings indicate the investment grades and the risk associated with the issuer company and the bond issue. The ratings are based on the credibility, stability and financial health of the company. The yield and rating grades have inverse relationship. Buy only bonds having higher ratings.

If you want to learn more check out these resources:

• How to Build a Diversified Bond Portfolio
• The Five Minute Portfolio Jumpstart

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