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What are the pros and cons of investing in bonds?
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Pros of Investing in Bonds:
 • Bonds offer a predictable stream of income;
 • Bonds can provide diversification to investors’ portfolios;
 • Interest earned on bonds is generally exempt from state income tax;
 • Bondholders have priority over stockholders when it comes to receiving payments;
 • Investment risks are generally lower with bonds than stocks.

Cons of Investing in Bonds:
 • Rising interest rates can reduce bond prices;
 • You cannot easily exit the market if rates move against you;
 • Limited upside potential;
 • Low liquidity;
 • Inflation can erode the value of bonds.