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Find the Types of Bonds Right for You

Interested in bonds but not sure where to start? In four easy steps below, we’ll help you figure out:

  • Which types of bonds to consider for your goals
  • What time frame and risk tolerance is right for you
  • And how involved you want to be in managing your bonds

First, learn which types of bonds may be right for you by deciding your investment goals.

  • Setting money aside for a near-term expense? Then you’ll probably want to choose from these types of bonds:

    • Short-term CDs (Certificates of Deposit)
    • Short-term Treasuries
    • Short-term investment-grade municipal or corporate bonds
    • Short-term bond funds
  • Are you saving for a future goal or trying to potentially protect your portfolio against some of the ups and downs of the market? These are the bonds you should consider:

    • Short- and intermediate-term Treasuries
    • Short- and intermediate-term agency bonds
    • Short- and intermediate-term international developed-market bonds
    • Short- and intermediate-term investment-grade corporate or municipal bonds
    • Agency mortgage-backed securities
  • Are you looking to maximize your income and willing to accept additional risk? Consider a combination of these types of bonds to generate higher interest income:

    • High-yield bonds or bond funds
    • Long-term Treasury or corporate or municipal bonds
    • Emerging market bonds or bond funds
    • Preferred securities or preferred securities funds
    • Bank loan funds

Second, consider how long your investing horizon is.

Traditionally, longer-term bonds produce higher yields but also have higher interest rate risk—the risk that the value of a bond will fall if interest rates rise. Thus, your time frame may be one factor in determining the amount of interest rate risk you’re willing to take on.


    0 – 4 years average maturity


    4 – 10 years average maturity


    10+ years average maturity

Third, determine the level of credit risk you’re comfortable with.

Credit risk is the chance that the issuer of a bond will not be able to repay its debt obligations. With riskier lenders, the return may be higher, but the odds of an investor losing their principal rise.

LOW CREDIT RISK = CDs, Treasuries, agency bonds, agency mortgage-backed securities

MEDIUM CREDIT RISK = Investment-grade corporate or municipal bonds, international developed market bonds

HIGH CREDIT RISK = Preferred securities, emerging market debt, high-yield bonds, bank loans

Finally, determine how involved you want to be in managing your investments.

  • If you prefer to make your own investment decisions, we have the tools to help you research, select, and monitor your own bond portfolio.

    Schwab BondSource® automatically compares prices from multiple dealers and shows you the lowest price available to Schwab. We provide trade history and market depth to help you choose the right bond at the right price.

    Try Schwab BondSource® and our other research tools.

  • If you’d like further guidance determining which bonds are right for you, get one-on-one guidance from a Fixed Income Specialist. They can help you with questions you may have about strategy, placing orders, or specific bonds.

    Learn more about reviewing your portfolio and talking bond strategy with a Schwab Fixed Income Specialist.

  • If you would prefer to leave decisions about bonds to a professional, you can turn to specialists who will professionally oversee your individual securities based on your investment style and strategy.

    Learn more about Investment Advice at Schwab.

Now that you know:

  • Which types of bonds could fit your investment goals
  • The time horizon you’re comfortable investing in
  • And how involved you want to be in managing your bond portfolio’re ready to start your search
for the bonds right for you.