Long-Term Investing with AAA Bonds

AAA bonds are the bonds of companies that have received the highest rating from Standard & Poor's and Moody's for their creditworthiness. These credit ratings agencies assign ratings from AAA down to D. The lower you go on the scale, the more risk you are taking as an investor in corporate bonds, and the higher the interest rate you will earn on your investment.

The main risk with corporate bonds in general is that a company could go bankrupt. If this happens, you have a chance to get your money back as long as the company has enough assets to liquidate to pay its creditors; however, if it does not, you may receive nothing back.

Why Invest in AAA Bonds?

The main reason to invest in AAA bonds for the long term is their safety. Companies rated AAA are typically large and well-known. As many bonds last for 20 to 30 years, you definitely want to put your money into a company that stands a good chance of being around for that length of time. This way, you can expect to earn regular interest payments for the full term and then receive your initial investment back.

Diversification

While AAA bonds represent a safe form of investment, nothing is a sure thing. Therefore, you will want to do the best you can to diversify your portfolio with several different bonds and other kinds of investment tools. Bond investing should be only part of a much larger investment portfolio. This method of investment will provide you with a way to weather any economic storms that may come along.
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