As with most investment decisions, choosing the credit quality of a bond investment depends on your risk tolerance and your financial goals. Here are some general tips:
-
For investors with little or no tolerance for risk, government bonds are usually the best choice. You'll receive less income than you would from lower-rated bonds, but there is also less risk.
-
Investors who desire more income and have a higher risk tolerance may want to consider corporate bonds.
-
For investors who can tolerate even more risk, high-yield corporate or local government bonds may be an option.