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Show Emery County Progress, Castle Dale, Utah - Tuesday. 7B December 8, 1998 Consideration suggested when discussing bond investment JOHN FORD Financial Adviser B rate risk. Lets say youre holding bonds paying an interest rate of, say 6 percent, and interest rates in the general market rise tomorrow to 8 percent on the same type of bonds. You could sell the bonds but no one would buy them unless you lowered their price. Thats why rising interest rates depress the value of older bonds, while falling rates inflate them. Call risk. Before buying bonds, check to see if theres a call feature. This is a provision that lets the bond issuer redeem the bond (buy it back from you) before the maturity date. If general interest rates start to fall, issuers would want to refinance at a lower rate. Thats good for them, and not so good for you, since you lose the higher interest rate if your bonds are called. Bond quality. Bonds are issued by all types of corporations and government agencies. U.S. Treasury bonds are known as the safest types of bonds available, since theyre backed by the full faith and credit of the United States. Cities, counties and other municipalities also issue bonds to, among other things, build highways, schools and stadiums. Anyone whos been around long enough to hear the phrase, His word is his bond knows the steady, solid feeling that the word bond evokes. If youre a retiree who invests, you may be littery about what the stock market might do next. Is it time to switch to bonds? Its true that bonds generally provide a more stable interest rate while stocks can look like theyre taking a roller coaster ride. Thats because bonds are really an IOU. When you invest in bonds, youre loaning money to a bond issuer at a stated interest rate. Bonds, indeed, can help balance a portfolio thats too heavily invested in stocks alone. Interested? Here are four things to ask your financial advisor if ou invest in bonds: Interest rate risk Like stocks, bonds are continuously being traded on the open market. Some people buy bonds and hold them until maturity date (the date the principal becomes due and payable), but most bonds are bought and sold many times before maturity (which could be as far away as 30 years). Along the way, their prices fluctuate. So even though bond coupons have a stated interest rate, if you sell bonds before maturity there may be interest Corporations may issue bonds to raise money for a variety of reasons. These bonds can range in quality depending on the strength of the business. Moodys, Standard & Poors and y Tax-exem- pt f tax-exem- pt tax-favor- bonds. Good grade bonds can open the door to more steady returns and help you recover a sense of security in these uncertain times. They may not provide the double digit returns of recent bull markets, but theyre woi th exploring. Talk to your financial advisor about bonds and how they might be appropriate for you. 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