Exchange-Traded Funds For Dummies, 3rd Edition

Chapter 13

For Your Interest: The World of Bond ETFs

IN THIS CHAPTER

Examining the rationale behind bond investing

Recognizing different kinds of bonds

Appreciating the risks that bond investing entails

Knowing how much to allocate to your bond portfolio

I love inline skating. Sometimes, I admit, I have taken to the Pennsylvania hills a bit too fast. There’s just something about the trees racing by and the wind in my face that I can’t resist. Whoosh!

On occasion, I’ve hit a bump, or some tiny driver in a monster SUV who can barely see over the steering wheel has cut me off, causing me to crash to the pavement. But thanks to the heavy, black plastic armor that covers my knees, elbows, wrists, and head (think of me as the Black Knight of Wealth Management), I’ve never been seriously injured.

Bonds are your portfolio’s knee and elbow pads. When the going gets rough, and you hit the big bump (by any chance, do you remember 2008?), you’ll be very, very glad to have bonds in your portfolio.

Plain and simple, there is no time-honored diversification tool for your portfolio that even comes ...