Corporate bonds can boost returns

Corporate bonds normally offer a better rate then government issues, but stick with companies that have good credit ratings. For direct bond investing, we recommend that only corporate bonds with an “A” or better safety rating be considered. A broker can advise you of the rating of any bond you’re looking at, or you can check out the Web sites of Canada’s two bond rating services, Dominion Bond Rating Service ( or Canadian Bond Rating Service (

Be wary of any bonds with unusually high yields. The risk of default (which means the issuing company can’t pay the interest or perhaps even the principal) may be relatively high, and such bonds take on added risk during periods of economic slowdown such as we’re experiencing.

There are also some bond funds that specialize in corporate bonds. However, make inquiries about the quality of the issues in their portfolio before investing.

Adapted from Gordon Pape’s 2002 Buyer’s Guide to RRSPs, which will be published in November by Prentice Hall Canada.