You want to invest in bonds… but what kind? First, look at your financial goals. If you want a regular source of income, the typical advice is to find short or medium term bonds.
However, if you are seeking capital gains—big amounts, rather than frequency or regularity of pay-offs—then you should look for long term bonds. Long term bonds tend to earn more because aside from the interest it earns for you, you can also get big profits each time the country’s interest rates drop.
You can also get tax-exempted municipal bonds. They may have lower yields but they become more cost efficient if you are up in the upper 28% of the tax bracket. Once the government’s done with all the deductibles, you may find that the “high yield” bonds net a lot less than you expected.
