Are corporate bonds a good investment?

Corporate bonds are debt securities that companies issue to raise capital. Corporate bonds are often seen as the "yin" to stocks' "yang", and are a key component of a diversified portfolio. Corporate bonds are far less volatile than stocks but they provide generally lower returns over time. They are less risky than stocks but they aren't risk-free.

What are the disadvantages of corporate bonds?

The disadvantages of corporate bonds: Although they are considered low-risk corporate bonds are not risk-free. The all-important ratings that are attached to bonds when they're issued can be lowered later due to unanticipated events. The worst-case scenario, a corporate bankruptcy, could erase your investment.

What are the risks associated with corporate bonds?

Corporate bonds also come with associated risks such as: This is the risk that the issuing corporation may default on its bond payments or go bankrupt, causing you to lose some or all of your investment. This is the risk that changes in interest rates will affect the market value of your bonds.