The Bond Market: What bonds are right for you?

A good way to diversify and give stability to your portfolio is by investing in secure bonds. Bonds don't yield as much interest as stocks, but they are a safe way to invest your money.

Types of Bonds

There are many different types of bonds and you will want to buy specific types that make sense in your portfolio. Most common are government bonds or EE bonds.

Treasury Bills are short-term government securities that will mature anywhere from within a few day to up to 26 weeks. These are sold at a discount from their face value.

Treasury notes are government securities that mature at 2, 5, and 10 years and pay interest every six months.

Treasury bonds are 30 year bonds that pay interest every six months. Treasury Inflation-Protected Securities, or TIPS, are marketable securities whose principal is adjusted by changes in the consumer price index.

I savings bonds are a low-risk savings product that earn interest while protecting you from inflation. They are sold at face value.

EE savings bonds are a secure savings product that pay interest based on current market rates for up to 30 years. Electronic EE savings bonds are sold at face value and paper EE savings bonds are sold at 1/2 face value.

Links

TreasuryDirect.gov - Government backed savings bonds that you can purchase online.