Investment bonds

Q

When would be a good time for me to buy bonds?

— B.B., Los Alamos, New Mexico

AThe answer to that question will vary from person to person, depending on circumstances and temperament. Those who can handle some risk and who have many years — if not decades — before retirement might choose to focus solely on stocks, as stocks have outperformed bonds over most long periods.

Still, even risk-takers might want to include some bonds in their portfolios for diversification, as bonds sometimes rise in value when the stock market falls — though it doesn't always work that way. For example, the stock market is down sharply so far this year, and the Bloomberg Barclays U.S. Aggregate Bond Index was recently down, too — by about 12%.

There are many kinds of bonds, often issued by governments or corporations, with different rates and terms. While U.S. government bonds are among the safest, they tend to offer lower interest rates than corporate bonds. If you expect interest rates to rise for a while, you might invest in shorterterm bonds instead of getting locked into a low rate for a long time. Also consider the U.S. Treasury's “I-bonds,” which feature inflationadjusted interest rates. The Series I savings bond's rate was recently 9.62%!

What good books cover stock market history?

— H.D., Murfreesboro, Tennessee

A

Check out Peter L. Bernstein's “Capital Ideas: The Improbable Origins of Modern Wall Street” (Wiley, $20), “A History of the United States in Five Crashes: Stock Market Meltdowns That Defined a Nation” by Scott Nations (William Morrow, $18) and “A History of the Global Stock Market: From Ancient Rome to Silicon Valley” by B. Mark Smith (University of Chicago Press, $17.50).