Summary of Secured and Unsecured Bonds

Bonds are favored by investors seeking current income and safety of principal. Some of these investors are willing to take more investment risk for the potential to get higher returns than others. Depending upon your risk tolerance, you may choose unsecured bonds if they offer high current income potential. Conversely, you may not be able to take much risk with your income. In this case, you would look for bonds that are backed by more than the good faith and credit of the issuers while seeking higher returns.

As a bond investor, you should become familiar with the different ways in which bonds are secured. This will help you choose bond investments best suited to your investment objectives and risk tolerance.