Bonds are generally safer due to having a maturity date, paying interest and are payable upon an institutions failure before stocks are repaid. Bonds can default, as was the case for more than 100 companies in 2016 alone (Cox, 2016). More than 100 companies defaulting on bonds may be worrisome for a new investor or even an experienced investor with not much money to invest. Proper research is key to avoiding unnecessary risk when it comes to purchasing bonds, at the end of the day past performance is no indication of future results.
Investing in bonds as part of any well diversified portfolio still takes work and research. Having bonds that pay interest every six months, which is typical of most bonds, and checking whether or not the bonds are callable can save some headaches down the road (Kapoor, Dlabay, Hughes 2016). US treasury bonds are sold in increments of $100 with a minimum purchase of $100. While the US credit rating has been decreased recently this is still the safest investment around, rarely defaulting or paying debt late. The only time I would recommend purchasing a US Treasury bond is if I could commit to a 20 year purchase that would effectively double my money. Using an inflation calculator I would come out around $500 dollars ahead over the life of the bond using the specific EE bond th...
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...play the market, or possibly receive an inheritance. For us mere mortal folks we need to focus more on saving than spending. Investments for your future will pay huge dividends when you can comfortably retire and not have to work in your golden years or beyond.
Long-term investing is the best fit for my family, and will likely remain that way well into the future. Unfortunately I was not taught to save money or to prepare for retirement. I grew up relatively poor but well taken care of. I was never hungry and had everything I absolutely needed and a few things that I wanted, though we were never well off. I would say that this has definitely shaped how I view money and how I would give advice about managing money. Stay humble and save for the lean times, just because you have your health and a great job now does not mean that you will remain that way indefinitely.
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