However, if you need a steady source of income, bonds may be an appropriate choice. Be aware that a bond's market value usually rises when interest rates fall. So, it's important to sell your bonds when the time is right. Your return is usually calculated both in terms of current yield and yield to maturity. Do not confuse the bond's interest rate with its yield.
Yield depends upon the rate.
Keep in mind that as interest rates rise, the market value of bonds typically fall. To help minimize the risk, examine the best and worst returns over one-year holding periods. All investments face inflation risk. C ash Equivalents . . . These investments have very little risk of losing value and can be easily converted into cash.