In fact, the market lost more than 20 percent of its value no fewer than nine times in the last 40 years. If you need cash to pay for a sudden illness or retirement, there's a decent chance it may not be there. That's a regular payment based on a set interest rate. The value you get from bonds is generally through their coupon payment, while from stocks it's the increase in the stock's price. If you're wondering about government bonds vs. corporate bonds, there are a few things you should know.
Corporate bonds pose more risk than government bonds.
That's because government bonds are backed by the federal government, while a corporate bond is only as good as the company behind it. And companies can go belly-up. The higher risk connected with corporate bonds means you'll be compensated with a higher interest rate. Municipal bonds are bonds issued by cities, counties and states to pay for such things as roads and schools. The benefit of these bonds is that the earnings are usually exempt from federal income taxes.