Page 89 - FlipBook BACK FROM SARAN - MAY 5 2020 - Don't Make Me Say I Told You So_6.14x9.21_v9_Neat
P. 89
Don’t Make Me Say I Told You So 75
there are no buyers, or few buyers, the bond holder may be
forced to sell at a significant discount to market value. Liquidity
risk is higher for thinly-traded securities, which are usually
bonds with lower ratings, bonds that were part of a small issue,
bonds that have recently had their credit rating downgraded,
or bonds sold by an infrequent issuer. Bonds are generally the
most liquid during the period right after they are issued, a time
when they typically have the highest trading volume.
There are other risks that can affect bonds, but what’s
important to remember is that fixed-income investments have
risks, just like investing in stocks.
Summary
► Bonds are popular investments because they pay a fixed
income, and are typically less risky than stocks.
► Bonds can be issued by corporations or government
entities, and may have maturity dates ranging from just
months to 30 years.
► Investing in bonds also carries risk, and can lead to a loss
of purchasing power or principal.
Chapter 3: You Must Have Growth In Your Portfolio
