The primary attractions supporting investing in bonds or other fixed income instruments have traditionally been high income and safety. People invest their principal in bonds and receive a stated interest rate (coupon) over the life of the bond and are given the promise of having their principal returned at maturity. Under normal times, bonds would typically pay a higher rate of interest than the dividend rate on stocks. Consequently, bonds have acquired the reputation as low risk and high income instruments.

However, risk is a multifaceted concept. The risk of losing all your money is one of the investor’s greatest fears. Virtually all high-quality bonds eliminate this loss of principal risk. But there are additional risks…. CLICK HERE to read the complete article