Originally posted by: PingSpike
What kind of risk/returns do bond funds usually give? Are they almost completely safe? Like a step more dangerous then an FDIC insured savings account?
Average annual returns seem to range from 4-9% per year (at least for the Vanguard funds). I believe they are fairly low risk because they don't really go up and down in the same way that stocks do. Instead, the return rates go up and down, so there's really no way to lose your money unless a substantial number of the bonds the fund is invested in are never paid. I don't know how frequent this is, but I think you can get decent returns without risking too much. The fund I linked, for example, invests in "junk bonds" but still has limits as to what percentage of the holdings can be in bonds under a certain quality rating.
But, correct me if I'm wrong about any of this.
EDIT: Oops, didn't see DaveSimmons post before this 'cause I got distracted while replying.