December 10, 2008

AAA Bonds trading for 6-7%

Corporate bonds with AAA ratings are trading in the 6-7% yield range. You can even find a number of AAA municipal (tax free) bonds trading for over 6%. I did a search in my Scottrade brokerage account and found a lot of GE bonds for 6-7% range and several municipal bonds in various states for over 6%.

These are good rates for bonds. Individual Bonds have fixed returns and AAA rated bonds have very low default rates. But if you're considering in investing in individual bonds make sure you have your investment diversified over several bond issuers so just in case a company or municipality defaults it won't take your entire investment down.

For more on bonds see my previous series:
Bonds 101, part 1 - Overview of Bonds
Bonds 101, part 2 - Glossary of Bond Terms
Bonds 101, part 3 - Treasury, Municipal, Corporate and Junk
Bonds 101, part 4 - Default Rates on Bonds
Bonds 101, part 5 - Bonds Versus Bond Funds
Bonds 101, part 6 - How To Buy Bonds

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