Say 'bonds' and most investors picture sleepy government-issued Treasuries or municipal bonds — safe but low return. But experienced investors know that corporate bonds, even junk bonds, can be very high yield fixed income instruments and quite liquid.

Depending on your investment strategy, a good selection of corporate bonds can turn a conservative portfolio into a strong performer without dramatically increasing risk. High yield bonds, and especially junk bonds, require professional advice before investing. But key to beginning that conversation is first understanding corporate bonds and high yield bonds of all types.

In this guide to high yield fixed income and corporate bonds, you’ll learn:

1. Differentiating types of corporate bonds.
2. How to buy, track and trade high yield bonds.
3. High yield bonds, high-yield fixed income and so-called 'junk' bonds.
4. How to measure risk when buying high yield bonds.

Action Steps
The best contacts and resources to help you get it done

Choosing from types of corporate bonds

When governments large and small anywhere in the world need money, they can tax or borrow. If they borrow, it's a bond, which is paid back with interest. Since it's government and generally safe, the interest paid is low, even zero when adjusted for inflation (although government bonds are normally tax exempt). Corporate bonds, however, are loans by investors to companies. Here, depending on the company's financial history, interest paid is higher, even competitive at times with stock market returns.

I recommend: The Financial Industry Regulatory Authority offers a decent database to explore investing in corporate bonds.

Buying and selling corporate bonds and high-yield debt

Most of us won't buy individual corporate bonds, instead investing in a mutual fund that buys bonds or as part of a so-called 'targeted fund' investment that includes an increasing portion of less-risky corporate and government bonds as the investment target date nears. However, one can buy and sell bonds like any stock in a normal brokerage account.

I recommend: Among the bigger mutual funds companies that market corporate bonds in funds and individual corporate bonds, consider Fidelity, Vanguard, Schwab and TD Ameritrade.

Want more risk and return? Corporate bonds can do that

Even a few decades ago, corporate bonds were a pretty sleepy investment. Then Wall Street took companies down on their luck, rechristened their high yield fixed income instruments 'junk bonds' and made a killing selling high yield bonds debt to a market hungry for something new. Junk bonds are out. They now call junk bonds 'high yield bonds' or 'high yield fixed income.'

I recommend: Check out eye-popping double-digit returns on junk bonds on the Yahoo! Finance page on high yield bonds or this screen from MSN Money on high yield bond funds.

Track your risk when investing in corporate bonds

The upside of corporate bonds and high-yield fixed income like high yield bonds is better returns. The downside, of course, is the potential for a given corporation to go under, making those corporate bonds worthless paper.

I recommend: Watch your risk while investing in high yield bonds by researching the ratings of corporate bonds through ratings agencies, like Moody's, Standard & Poor's and Fitch Ratings.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If your goal is income or cash preservation, government bonds are lower risk. Buy high yield fixed income bonds only if you can withstand some losses.
• •  Double-digit returns for long periods is virtually impossible. Take any such claim about high yield bonds with a big grain of salt.
• •  As with stocks, blue chip corporate bonds pay less but tend to be safer, while junk bonds sold by companies in turnaround mode offer risk, but greater reward.

Are you thinking about adding high yield bond funds investments to your portfolio, but worried because many professionals have advised you to stay away from them because they're risky? High yield bond funds, also known as junk bonds, pay higher yields than US government bonds. High yield bond funds are risky because the companies are usually less credit worthy.

High yield bond funds have helped businesses throughout the years. For example, CNN may not be where it is if it had not been for junk bonds. To be a successful high yield bond funds investor, consider doing the following:

1. Use an online junk bond funds brokerage firm to invest in high yield bond funds.

2. Open an account with a mutual fund company and start investing in high yield bond funds.

3. Use investment research companies to find high yield bond funds.

Action Steps
The best contacts and resources to help you get it done

Invest in high yield bond funds through an online junk bond funds brokerage firm

You can buy high yield bond funds through an online brokerage by opening up an account. These high yield bond funds brokerage firms offer various high yield bond funds you can choose from. If you need the help of a junk bond funds broker, these firms offer this service.

I recommend: Scottrade is a well-known high yield bond fund firm. If you're a high yield bond funds trader, you can take advantage of its trading platforms and research. TD Ameritrade also is a popular brokerage firm. The company provides investment information, such as the fund's profile, and the ability to compare funds.

Purchase high yield bond funds through a high yield bond mutual fund company

You can bypass the middleman and invest in high yield bond funds through a mutual fund company. You'll have to complete an application and submit it to the company, but this process should not take long to complete, since most fund companies will allow you to file the application online. In addition to buying and selling high yield bond funds, you can check your account balance and the number of shares you own in the fund.

I recommend: Franklin Templeton has the Franklin High Income Fund that invests in both foreign and domestic high yield bonds. It has been operating since 1969. You can invest in T.Rowe Price's Tax-Free High Yield Bond Fund. The fund invests in municipal securities that have low or medium quality.

Find high yield bond funds through financial investment research companies

Before you invest in high yield bond funds, you'll want to do some research. If you're hesitant about investing in high yield bond funds, you might want to take advantage of commentaries that analysts provide. These analysts will rate the high yield bond funds, based on their total returns and performances.

I recommend: If there's one investment research company you should use, consider Morningstar. Not only do professional traders and investors rely on Morningstar in the US, but many in Australia, Europe, and Asia rely on the company's research as well. MarketWatch, which is part of Dow Jones & Company, is another leading provider of investment research. It offers business news and real-time commentary.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Sign up with one of the online stock chart providers so that you can study high yield bond funds. This will help you to time your buy and sell signals.

Whether you're a high yield bond funds trader or just looking to buy high yield bond funds for your business, you should stay abreast of the latest high yield bond funds news and trends. Successful high yield bond funds investing requires you to stay informed with the latest news concerning funds trading.

Before you invest in junk bond funds, make sure you get all of the high yield bond funds help that you need from high quality news sources. As you seek out these sources, keep the following in mind:

1. There are many financial news sites that provide information specifically about high yield bond funds.

2. Blogs and RSS feeds are great resources for up-to-the-minute high yield bond funds news.

3. You can find sites that focus specifically on news concerning junk bond funds.

Action Steps
The best contacts and resources to help you get it done

Go to financial news sites for the latest high yield bond funds investments news

Financial news sites are great places to look for high yield bond funds news, as most have sections devoted entirely to them. Generally, these sites also provide in-depth supplemental information about high yield bond funds investing. If you are new to the world of high yield bond funds, these sites are the best place to start.

I recommend: Get up-to-the-minute high yield bond funds reporting from Yahoo! Finance. You can also peruse other investing news and sign up for its RSS feed. Read the High Yield Bonds news section on the Leveraged Finance News and SourceMedia website. You can also register for access to member-only content, including expert blogs and weekly email alerts.

Read blogs and RSS feeds devoted to high yield bond funds brokerage news

Blogs and RSS feeds provide you with high yield bond news and information that is constantly updating. Most blogs and feeds also allow you to sign up to receive their updates directly to your inbox.

I recommend: Read the latest news posts covering high yield bonds at the BloggingStocks blog. The site also provides a comprehensive selection of useful links. Search the U.S. Markets News RSS feed at Fidelty.com for all the high yield bond funds news of the day.

Get the latest junk bond funds brokerage news from top industry sources

Whether you're a junk bond funds broker or just looking for junk bond funds help, it's a good idea to get acquainted with the industry's top news sites. Typically, these sites are best for the more seasoned high yield bond funds investor.

I recommend: Stay up-to-date with the latest junk bond funds news with the junk bonds news section of FierceMarkets' FierceFinance website. Go straight to the Junk Bond News section of the Global Investing Today website from EIN News.

When investing, it's important to diversify your funds in order to prevent major losses. High yield bonds are one type of investment vehicle that allows you to do this. After deciding to invest in junk bonds, you'll need an online brokerage or a mutual funds company to make the purchase. Check the total returns in order to decide which ones to buy. Get started by learning the following terms.

Action Steps
The best contacts and resources to help you get it done

Junk bonds

Junk bonds is another name for high-yield bonds. The name comes from the fact that high yield bonds do not come from reputable companies. The company that issues junk bonds is more risky and may default on the bond, hence the name 'junk.'

I recommend: Learn more about junk bonds from Morningstar.

Online brokerage

An online brokerage allows you to purchase high yield bonds for investment. Online brokerages are less expensive than a traditional fund manager, but they do not offer the same level of advice and service. Investors must do a lot of the leg work on their own.

I recommend: Scottrade is an example of an online brokerage.

Mutual funds company

Some people choose to purchase high yield bonds through a mutual fund. A mutual fund will purchase junk bonds from many different companies, which allows you to spread out the risk. You can invest this way through a mutual funds company.

I recommend: T. Rowe Price is a mutual funds company.

Tax-free investing

In many cases, investors are required to pay taxes on the money they make from their investments. Municipal bonds, however, are tax-free. Tax-free investing means that you can invest your money without having to pay high taxes.

I recommend: Learn more about tax-free investing from Franklin Templeton.

Total returns

The total return is a way to measure how well a high yield bond has performed in the past. It shows, on average, the types of returns that investors have made on their investment. While this does not guarantee that the fund will continue to perform that way, it helps people to form a general idea about the fund.

I recommend: Learn more about total returns from NASDAQ.

Exchange traded funds

Exchange traded funds, or ETFs, are investment companies that only sell shares of their stock in large blocks. They typically track a particular industry.

I recommend: The Securities Exchange Commission explains exchange traded funds.