Investment grade bonds are considered as such if the bonds rate a specific grade by one of three credit rating agencies. These particular bonds need to be likely to meet payment obligations, which banks are permitted to invest into them. For more information on investment grade bonds and how they affect your investment portfolio, it can be beneficial to learn some of the key terms and concepts associated with them, such as bond ratings.

Action Steps
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Investment portfolio

An investment portfolio illustrates the passive holdings of securities of an individual. This can include foreign stocks and bonds, as well as other financial assets. None of these necessarily will entail the investor's active management or control of the securities' issuer.

I recommend: How to build an investment portfolio is a topic at eHow.com.

Collateralized bond obligation

A collateralized bond obligation, often abbreviated CBO, consists of investment grade bonds. They are backed by pools of junk bonds, or those which are not of the same grade as the investment grade bonds. The CBO offers diversification of the bonds. It also represents different levels of credit risks with regard to the bonds, althoughit does not represent different maturities.

I recommend: The practice of collateralized bond obligation of Chapman and Cutler LLP is explored at Chapman.com.

Ratings of bonds

Also referred to as bond ratings, the ratings of bonds are indicative of the credit quality of specified bonds. The investment grade attached to certain bonds is specific and non-negotiable. Rating agencies will use the same letter grades, but they will also use various upper- and lower-case combination options.

I recommend: BondTalk.com explores the ratings of investment grade bonds at length.

Value strategy

A value strategy attempts to locate the various shares of different companies that are able to represent a good value. It is believed that while the initial value of a bond may not be ideal, in time the investment market will recognize the true value of the stock. When this happens, it is believed that the price for the bond will rise. Often, believers of the value strategy are termed fundamentalists. Such people put their focus on the fundamentals of the company and/or the bond.

I recommend: Invest-Faq.com takes an in-depth look at the investment strategies of value and growth with respect to investments and bonds.

Market neutral

A market neutral strategy attempts to profit from both increasing and decreasing prices. These prices may occur in a single or within numerous markets. Market-neutral strategies have been attained after comparing long and short positions of the bonds to increase their returns. These returns occur from making impressive selections and decreasing the return from broad market movements.

I recommend: SeekingAlpha.com discusses how investors can create their own market neutral portfolio.

Sell discipline

A sell discipline is a method of selling enforced in order to ensure that gains result from the investment in investment grade bonds. An effective sell discipline will preserve capital. Individuals who utilize a sell discipline need to know the optimal time to sell.

I recommend: 123Jump.com discusses its specific sell discipline, as well as other industry aspects such as opportunistic styling and risk control management strategies.

Investment grade bonds are a safe inclusion to anyone's investment portfolio. Investment grade bonds are bonds that rate highly with commercial credit rating companies. Though you probably won't make a killing from your investment, they are a safe bet and a good way to keep your risk down in your portfolio.

Before you buy, put yourself through investment grade bonds training and learn the ins and outs of the bonds you want. Before you invest, make sure you:

1. Explore the different types of bonds that are available and get investment grade bond advice from experts.

2. Get investment grade bonds information by tracking down their ratings before you buy.

3. Use an investment grade bonds consultant to help you use the bonds to diversify your retirement portfolio.

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Explore the different types of investment grade bonds available

There are several different types of investment grade bonds that vary in risk and profit. You can invest in investment grade bonds that have backing from a corporation or federal goverment. Know the risks and benefits of each type of bond before you invest.

I recommend: CNN Money has a guide to bonds, including assessing the potential risks. Wells Fargo has a breakdown of the types of bonds that you can invest in.

Get help with investment grade bonds by searching for their ratings

The key to finding good investment grade bonds is to find bonds with top ratings from commercial credit rating agencies. Professionals from these agencies pour over the information from these bonds and investigate the safety of your potential investment. You can find these bonds by using a bond screener online to screen out bonds with bad ratings or by searching the ratings directly at the agency's websites.

I recommend: Use the bond screener at Yahoo! Finance to search for investment grade bonds. Once registered, you can find the ratings of bonds directly from top rating agencies Standards and Poors and Moody's.

Diversify your portfolio with investment grade bonds

Since they are safe investments, investment grade bonds are always great to include in your investment portfolio. You can buy the bonds directly or buy mutual funds offered through brokerages that include investment grade bonds. You can also use the brokerages to get investment grade bonds advice.

I recommend: Fidelity breaks down the bond funds it has available and also shows you the potential risks with each of them. TD Ameritrade has a bond wizard what will help you find the best investment grade bonds for your portfolio. Also, check out the bond funds available through Vanguard.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you are hoping to make more money from you bonds, you might want to consider high yield bonds. Be careful, though. They are not investment grade bonds because they have much more risk than other bonds.
• •  There are a lot of bonds to choose from so using an investment grade bonds consultant might be your best bet to finding a great investment.

Investment grade bonds are generally one of the safest financial vehicles on the market. Even if the underlying company files for bankruptcy, the bondholders are usually one of the first parties to receive a fair settlement. Fortunately, with investment grade bonds the previous scenario of bankruptcy rarely happens. In addition, before you purchase an investment bond you need to understand the pricing and cost structure of these instruments.

To obtain the necessary investment grade bonds information to price these assets correctly, it requires research and knowledge of current economic conditions. In tough economic times, investors tend to be risk averse and purchase more investment grade bonds. This demand drives up the price of bonds and lowers the yield. If you can grasp the investment grade bonds pricing and costs structures, it'll make investing in them much simpler. To help with the pricing and costs of these bonds there are few items to consider:

1. Use the investment grade bonds training available on the Internet to establish a knowledge base.

2. Review the investment grade bonds advice and pricing tools.

3. Compute the investment grade bond pricing and costs with online calculators.

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

Employ basic tutorials for help with investment grade bonds

In pricing investment grade bonds, you could just plug in a few number and come up with the market valuation of the bond. However, this doesn't give you the full picture of the investment grade bonds industry. You need to know where these numbers come from and what happens to bond prices when the inputs change. If you establish a working knowledge of investment grade bonds, it'll save you money and mitigate the risk.

I recommend: FinWeb offers basic tutorial on bond pricing for an introduction to the industry. The Financial Industry Regulatory Authority or FINRA is the regulatory agency for bonds and is an excellent resource for investment grade bonds information. Bond Talk is a website dedicated to all aspects of the bond market and provides an in-depth look into the pricing and costs.

Examine the investment grade bonds training and tools available

Now that you understand the basics of the bond market, it's time to determine the pricing and costs of these bonds. There are tutorials available for advanced bond concepts as well as software add-ons that make this process much easier.

I recommend: Study the advanced bond pricing guide from Investopedia for further details. For an explanation of the typical bond pricing structure, review the primer available at Morgan Stanley.

Employ the online investment grade bonds calculators to figure costs and pricing structures

If your company is pressed for time or lacks the necessary expertise, you could hire an investment grade bonds consultant to price the bonds. However, once you understand these financial instruments you can use the online calculators to price them without professional assistance.

I recommend: Evaluate the investment grade bond calculators available at Calculator.com and Montego Data Limited.