BONDS INTO TOMORROW

Physician's Money Digest, June30 2003, Volume 10, Issue 12

Bonds have done nicely over thepast 3 years, but many on WallStreet worry that the party may beover. If stocks start a comeback andinterest rates rise, bonds could bevulnerable. One way to protect thegains you've made on the bonds inyour retirement savings and stillgenerate decent yields is to putsome of your money into bank CDsor US savings bonds. Yields aredown in the 2% to 4% range, butthat's still healthier than the 1% orless that you would make in amoney market fund. To cushionyour bond portfolio from theimpact of rising interest rates,choose short-term bond fundsrather than long-term bond funds.Adding a corporate bond fund tothe mix can increase yield, althoughit would also add more risk.