Bond Funds
Like bonds, open-end bond funds produce regular income. Unlike bonds, however, these funds have no maturity date and no guaranteed repayment of the amount invested. On the plus side though, the earnings can be reinvested in the fund to increase the principal. And buyers can invest a much smaller amount of money than they would need to buy a bond on their own and get a diversified portfolio to boot. For example, some bonds may require an investment of $100,000 and make additional purchases for even smaller amounts.
Bond funds come in many varieties, with different investment goals and strategies. There are investment-grade corporate-bond funds and riskier funds, often sold under the promising label of high-yield funds.
