Your Guide to Bond Investing in 2012

Heading into the end of 2011 and the dawn of 2012, which bond categories will do best and which ones can you ignore?

Bonds are the investment standouts of 2011, with a broad index such as Barclays' aggregate returning nearly 7% and only emerging-markets bonds suffering severe losses. Bonds will be fine again in 2012. But which varieties will fare the best? What categories do you choose for the most current income? Which categories of bonds should you ignore, or sell if you own them?

The last question is the easiest to answer. The ones to avoid are intermediate-term and long-term U.S. Treasury bonds, whose role has changed from a popular source of income to a bomb shelter for the world’s governments, banks and other financial institutions.

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Jeffrey R. Kosnett
Senior Editor, Kiplinger's Personal Finance
Kosnett is the editor of Kiplinger's Investing for Income and writes the "Cash in Hand" column for Kiplinger's Personal Finance. He is an income-investing expert who covers bonds, real estate investment trusts, oil and gas income deals, dividend stocks and anything else that pays interest and dividends. He joined Kiplinger in 1981 after six years in newspapers, including the Baltimore Sun. He is a 1976 journalism graduate from the Medill School at Northwestern University and completed an executive program at the Carnegie-Mellon University business school in 1978.