The degree of risk, however, will vary with the type of debt and the issuer. This possibility doesn't mean that you should stash your money under your mattress and hide because that also entails a risk of loss. Besides, if interest rates were to fall, you could also have a capital gain. You can minimize some of your risks by working with a Tucker Anthony Investment Executive and implementing some Fixed Income Investing Strategies such as laddering and matching your bond maturities to your investment goals. Another risk depends on the credit worthiness of the issuer of the bond.
Credit risks vary with different types of bonds.
U.S. Treasury Securities carry the least amount of risk and U.S. agency debt has a slightly higher amount of risk. Credit risks are usually associated more with bonds issued by state and local governments that depend on their ability to raise revenues, and with corporate issuers whose credit risks are linked to their financial health and earning capacity. You can minimize this risk by having a Tucker Anthony Investment Executive help you monitor the issuer's credit rating either through independent rating services or through fixed income research. Perhaps the greatest risk to bond holders is the risk of inflation. Since bond coupons are generally fixed, the value of the interest payments can be affected by inflation.