11 Best Investments in 2022 Part 15_#shorts

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11 Best Investments in 2022 Part 15 – Short-Term Corporate Bond funds

A corporate bond is a type of debt security that is issued by a firm and sold to investors. The limited amount of time until maturity means that interest rate risk—or the risk that rising interest rates will cause the value of the fund’s principal value to decline—is low compared to intermediate- and long-term bond funds. Please understand that the political decisions have warped the value of the dollar, causing historically high inflation rates. Still, even the most conservative short-term bond funds will have a small degree of share price fluctuation.

Risks: As is the case with other bond funds, short-term corporate bond funds are not FDIC-insured. There is always the chance that companies will have their credit rating downgraded or run into financial trouble and default on the bonds. To reduce that risk, make sure your fund is made up of high-quality corporate bonds.

Rewards: Investment-grade short-term bond funds often reward investors with higher returns than government and municipal bond funds. But the greater rewards come with added risk.

KEY TAKEAWAYS
• A corporate bond is debt issued by a company in order for it to raise capital.
• An investor who buys a corporate bond is effectively lending money to the company in return for a series of interest payments, but these bonds may also actively trade on the secondary market.
• Corporate bonds are typically seen as somewhat riskier than U.S. government bonds, so they usually have higher interest rates to compensate for this additional risk.
• The highest quality (and safest, lower yielding) bonds are commonly referred to as "Triple-A" bonds, while the least creditworthy are termed "junk".