This general term covers several types of common and preferred stocks as well as stock equivalents. These obligations generally protect the safety of the principal and provide a specified rate of return. For more information on this topic, please see the Growth Funds section of our Choosing a Fund Page . For more information on this topic, please see the Growth and Income Funds section of our Choosing a Fund Page . Most frequently, these techniques involve buying something whose value will be increased by the same factors that cut the value of the investments being hedged.
Bonds are formal certificates of debt, usually issued by corporations or units of government.
For more information on this topic, please see the Income Funds section of our Choosing a Fund Page . This is an inherent risk in fixed-rate bonds. For more information on this topic, please visit the Market Timing section of Analyzing Your Personal Risk Tolerance , one of our Basic Investment Principles . Because these are short-term, they carry a low level of risk to the principal. Interest is earned at the current rate.