"The Risks to Investors of Bonds"
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All investing involves maneuvering around the twin concepts and risk and reward.
In theory, the more risk, the more reward.
And: the more reward, the more risk.
This is true in general but some types of risks reward investors more than others
And there're different risks associated with different investments, depending on their nature.
Bonds face the same risks as all other fixed income investments. I won't repeat the entire list.
One type of bond risk is:
1. Call Risk
The main risk of owning bonds are:
1. Inflation/Loss of purchasing power generation
If you own bonds, you must face these.
One more risk is always ever-present, but shouldn't be a problem unless you really go after high yield, junk bonds:
1. Credit risk -- diversification and sticking to highly rated lenders should keep this risk very small.
Another risk also applies -- one that most people have never heard of outside economics class:
1. Opportunity risk
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