Mar 27 2009
Junk-bond funds and Money market funds Investment
? Junk-bond funds invest in the debt of companies that have borrowed heavily and thus need to pay premium interest rates to borrow more. These funds pose greater risks to your principal than traditional fixed-income funds; however, they also typically promise higher rates of return.
Risk: High
Potential for capital appreciation: Low
Potential for current income: High
? Money market funds invest primarily in short-term government debt, bank deposits, and short-term corporate debt. The net asset values of money market funds are usually pretty stable. However, the yields are also relatively low.
Risk: Very low
Potential for capital appreciation: Very low
Potential for current income: Moderate
