Rarely will you find an investment where you gain a substantial reward without an equally substantial amount of risk. Let’s face it – the odds are stacked against you. Not only are there other huge banks and multinational corporations you have to compete against that have more capital than you will ever have, but there are millions of other investors trying to test their luck in the same market. Your choice of where to invest your money is therefore highly important. This is where corporate bonds come into play.
1. Corporate Bonds
Many times, corporations have great sales and service records but just don’t have the funds needed for a particular initiative. A corporate bond is high yield as essentially you are lending the company your money.
2. Credit Risk
Of course, you have to consider that many companies seek bonds because they are in financial trouble and need a quick cash injection to keep themselves afloat. It will be up to you to differentiate that companies are looking for a handout and that legitimately have a quality operation and simply need funds to expand and grow their business.
3. Corporate Bond...