In This Chapter
Figuring out whether bonds are for you
Finding out how bonds differ from other investments
Locating information about bond prices and performance
Determining the best way for you to buy bonds online
Bonds don't make very good cocktail party chatter. Just try to brag about your 5-percent-a-year bond return at a party. The only heads you'll turn will be the ones running away from you yawning. Bonds just aren't as exciting or glamorous as stocks, which can often gain more value in an hour than you'll collect from bonds all year.
But don't let the fact that bonds are, well, often boring discourage you from owning them. Bonds, often called fixed-income securities, are essentially IOUs issued by companies, cities, governments, and government agencies. These IOUs come with a promise to repay the lender by a specific time at a specific interest rate. These stable streams of cash flow can be very valuable if you choose bonds wisely. Bonds can help smooth out the ups and downs in your portfolio and help you reach your financial goals.
In this chapter, I explain what a bond is and how it differs from other investments, including stocks. I also show you ways to find out more about bonds and get up with the terms and lingo. You get a chance to discover Web sites that let you research bonds to find the ones that might fit your portfolio the best. And I show you ways to buy bonds online as well as a few alternatives to bonds you might consider. ...