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If you have a very short-term time horizon – especially less than one year or very conservative objectives – you may prefer to stick with money market funds to avoid having to sell your shares during periods of declining share price, or very short-term bond funds that seek minimal price fluctuation. |
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If you have a shorter-term time horizon (but at least one year or more aggressive objectives), you may consider a short-term bond fund. You may enjoy higher yields and total return than an investment in money market funds, but the value of your investment will fluctuate each day based on current market conditions. |
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If you have even more time to ride out the bond market's ups and downs and aggressive objectives, you may reap greater rewards with an intermediate- or longer- term bond fund or one with exposure to higher yielding, lower-quality bonds. |
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If you're investing for current income, you may want to choose a more conservative bond fund that will have more share price stability and principal protection.
An investment grade short-term bond fund may be appropriate. |
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For long-term growth, a more aggressive bond fund may have the ability to offer you higher total return, while carrying greater risk.
A long-term bond fund or multi-sector bond fund that has a high yield component may be appropriate. |
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Would daily changes in the value of your investment bother you? Decide which of the statements below best applies to the assets you are considering for a bond fund. |
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"I would prefer an investment with a low degree of risk. I don't want to take a chance that my initial investment will decline in value."
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"I am willing to take a moderate risk. I am comfortable with the fact that my investment may lose value but I want to earn a higher return."
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"I am willing to take a high risk. I want the highest possible return and am comfortable that my investment may decline in value."
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