Depending on your circumstances bonds can help you:

* Grow capital through high-yield returns There are high-risk/high-yield bonds that may be of interest to you as you look to grow financially. Remember that when you invest in higher-risk instruments you face a greater potential for loss due to interest rate risk and credit risk. Carefully research each bond offering and know a bond issue’s conditions and terms (including its’ rating, call features and whether or not it is insured) prior to investing. A financial advisor may be able to help you. Click here to learn more about “Selecting and Working with a Financial Professional.”
* Preserve your savings for a big future purchase If you are saving money for a large future purchase—a car, a wedding, a house—you might consider investing that savings in a low-risk bond with a maturity date that matches the date you will need the money. For example, new issue U.S. Treasury bills, notes and bonds are available directly from the Federal Reserve in three-month, six-month, and two-year and three-year maturities in $1,000 increments starting at $1,000. You can also buy outstanding Treasury or corporate bonds with maturities timed to your needs in the secondary market through a bank or a broker. Prices and yields will vary.
* Diversify your employer-sponsored retirement plan If your 401(k) or other employer-sponsored retirement plan offers a variety of mutual funds, you might want to allocate some portion of your assets toward bond funds to diversify your holdings and spread your risk. Because the stock and bond markets do not often move in the same direction, bond investments can stabilize and even enhance your overall returns. You might look into high-yield and long-term bond funds if you want to take more risk for the possibility of higher returns.
* Supplement your income Maybe you’ve received an inheritance or other large sum of money. Investing it in bonds can help you preserve the principal for the future while generating interest income that you can spend now. Depending on how much you have to invest, you might want to consider constructing a bond portfolio yourself with the help of an advisor, or investing in another type of bond investment such as a unit trust or bond fund.
* Develop discipline with dollar-cost averaging One of the common myths about investing is that you have to have a lot of money to do it. That’s a good reason to consider dollar-cost averaging. If you can only invest a small amount at a time, or if you are uncomfortable investing large chunks of money at once, dollar cost averaging can be a way to invest in bonds automatically on a regular schedule. First, consider working with a financial advisor to determine what types of bond investments are appropriate for your portfolio. Next, select a regularly scheduled date to have a pre-determined amount of money automatically withdrawn from an account of your choice and have it deposited into your brokerage account to purchase (or earmark toward purchase) the bonds you have chosen. Making small deposits over time will add up to consistent investments which can reap significant dividends over the long term. Think you don’t have enough money to invest? Consider the dollar-cost averaging approach to purchase bonds for your portfolio.