Bonds are different. Until the bond matures, you'll also collect interest. If you buy a bond when it's issued and hold it to maturity, things are simple. Bond investors can get burned by rising rates, which can send prices plunging. So if you want to sell, your 8 percent bond will fetch less.
Bond funds can be even more complicated.
As with stock funds, their advantage is the benefit you get from a professional manager's expertise and a diversified portfolio. But because a manager buys and sells bonds every day, a fund portfolio never matures, so you don't get the advantage of holding to maturity. And different funds invest in different types of bonds, all of them subject to different market forces, so investors have to pick between them, adding complexity. Bond bulls believe that the effect of the Asian market collapse on the U.S. economy has been underestimated, and that long-term interest rates are headed much lower than they are today. At one extreme is Edward Yardeni, chief economist for Deutsche Morgan Grenfell North America, the New York investment arm of Germany's largest bank.