You may look at the enormous variety of bonds as a world of choice. Or you may be overwhelmed by having to make an appropriate selection. Whether you're looking to invest for the first time or you want to add bonds to an established portfolio, you follow a two-step process. First you decide among the major subclasses, or categories: corporates, Treasury, municipal, and agency bonds. Next, you must identify specific issues within the subclasses you have chosen.
No easy task
As you
diversify
the assets you have allocated to bonds, your goal is to put together the right mix of risk and return. That involves looking at the interest rates various bonds are paying and the yields they're providing, as well as their terms, their ratings (if they are rated), and their tax status.
What complicates your task is that despite the similarities among bonds of the same type, each issue differs — sometimes slightly and sometimes dramatically — from the others.
Alexandra Lebenthal, President and Chief
Executive Officer of
Alexandra &
James, Inc.
Alexandra Lebenthal, President and Chief
