This Element is an excerpt from Higher Returns from Safe Investments: Using Bonds, Stocks, and Options to Generate Lifetime Income (9780137003358) by Marvin Appel. Available in print and digital formats.
When it might make sense to invest in high-yield junk bonds–and when you absolutely must stay away
Wouldn’t it be great to get 8% per year or more in interest income from a bond mutual fund? This is not idle fantasy when the average investment-grade bond is paying just 4%. You can get very juicy yields if you are willing to bear the credit risk of high-yield “junk” bonds. In this chapter, you learn how to recognize propitious times to reach for their yield, and when to stay away.