A popular way to offset some risk from investing in stocks is to keep some money invested in bonds. When you purchase bonds, you’re essentially lending money to a corporation, municipality, or other government entity. Bonds are generally safer and receive a rating from agencies such as Moody’s, Standard & Poor’s, and Fitch. Ratings act like a report card, and AAA-rated bonds are considered the safest.

Government bonds come with a guarantee from Uncle Sam that you’ll get your money back plus interest.³ At the other extreme are junk bonds, which are sold by corporations. Junk bonds promise much higher returns than long-term government bonds, but they’re high-risk, and in some cases not even considered investment-grade securities.