Better Yields From 4 Top Junk Bond Funds

If you're searching for a decent yield, getting 6% or 7% on your money can be awfully satisfying.

Everyone, it seems, is searching for yield: steady, rewarding returns from fixed-income investments. Steady is not hard to find, but rewarding is another matter. U.S. Treasury bonds maturing in ten years yield 2.0%. A bond issued by Goldman Sachs and maturing in February 2016 pays a mere 3.3%. A five-year savings certificate at the average New York City bank yields a paltry 1.1%. You might as well put your money under the mattress. Unless, that is, you want to take some risk.

In the fixed-income world, risk is being handsomely rewarded these days. Lending to the U.S. government and well-heeled firms like Goldman is such a popular activity among frightened investors that those borrowers have to pay only a pittance for the privilege of taking your money. But if you ratchet up the chances that you won’t be repaid, the interest rates start getting attractive.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.