Asset classes: Is a Guaranteed Investment Certificate (GIC) considered a bond?
There is a third type of asset that a GIC falls into: Cash. So while it does share some characteristics of a bond, such as (often) having a fixed interest rate, and having the ability to ladder their maturities, they would generally be considered part of your Cash component of your portfolio. "Instead of ""stocks"" I would refer to that asset class as ""equity.""  Instead of bonds, I would refer to that asset class as ""fixed income.""  Given that more general terminology, GICs would fit into fixed income."
it's just a passthrough security essentially.  sofi packages a bunch of loans, refinances them for the student, and you invest in sofi corporate debt as they pass through the returns on the loan to you in the form of bond cpns.  i mean its not exactly the same, but its pretty close this would make sense assuming debt payments incl. interest to the market for the debt assumed to purchase said boat/yacht is less than the lease payments over the life of both terms. If your lease payments are lower than term loan pmts incl. interest (or a similar debt instrument) then OP would still be right. TVM is irrespective of a competitors (or lessor in this case) Kc.  Although, this goes completely out the window if it's a bond-like debt vehicle since those cash flows are distributed in a completely different manner. Write off the entire asset class of corporate bonds? Finance theory says yes, the only two asset classes that you need are stocks and treasury bills (very short-term US government bonds). See the Capital Asset Pricing Model (CAPM). Perhaps something else comes with the bond so it is a convertible security. Buffett's Negative-Interest Issues Sell Well from 2002 would be an example from more than a decade ago: Warren E. Buffett's new negative-interest bonds sold rapidly   yesterday, even after the size of the offering was increased to $400   million from $250 million, with a possible offering of another $100   million to cover overallotments. The new Berkshire Hathaway securities, which were underwritten by   Goldman, Sachs at the suggestion of Mr. Buffett, Berkshire's chairman   and chief executive, pay 3 percent annual interest. But they are   coupled with five-year warrants to buy Berkshire stock at $89,585, a   15 percent premium to Berkshire's stock price Tuesday of $77,900. To   maintain the warrant, an investor is required to pay 3.75 percent each   year. That provides a net negative rate of 0.75 percent. "In theory, the term of the bond does not affect the priority.  It does not matter whether a ""Junior Subordinated Debenture"" is due in one year or sixty, it is still lower priority than a ""Secured Note"".  On the other hand, if the ""Secured Note"" is secured by something that is not worth as much as the note, the excess is an unsecured debt. In practice, the term of the bond has two effects: Short term debt holders are more likely to get out just before the company goes broke.  Sometimes their efforts to get out are exactly what causes the company to go broke!  (""Commercial paper"" is even more fickle than banks.) All other things being equal, and depending on the terms of the loan, some bonds get priority over bonds of the same type that are issued later.  For example, your first mortgage usually takes precedence over your second mortgage." "Looking at the list of bonds you listed, many of them are long dated. In short, in a rate rising environment (it's not like rates can go much lower in the foreseeable future), these bond prices will drop in general in addition to any company specific events occurred to these names, so be prepared for some paper losses.  Just because a bond is rated highly by credit agencies like S&P or Moody's does not automatically mean their prices do not fluctuate. Yes, there is always a demand for highly rated bonds from pension funds, mutual funds, etc. because of their investment mandates. But I would suggest looking beyond credit ratings and yield, and look further into whether these bonds are secured/unsecured and if secured, by what. Keep in mind in recent financial crisis, prices of those CDOs/CLOs ended up plunging even though they were given AAA ratings by rating agencies because some were backed by housing properties that were over-valued and loans made to borrowers having difficulties to make repayments. Hence, these type of ""bonds"" have greater default risks and traded at huge discounts. Most of them are also callable, so you may not enjoy the seemingly high yield till their maturity date. Like others mentioned, buying bonds outright is usually a big ticket item. I would also suggest reviewing your cash liquidity and opportunity cost as oppose to investing in other asset classes and instruments." Short-term to intermediate-term corporate bond funds are available. The bond fund vehicle helps manage the credit risk, while the short terms help manage inflation and interest rate risk. Corporate bond funds will have fewer Treasuries bonds than a general-purpose short-term bond fund: it sounds like you're interested in things further out along the risk curve than a 0.48% return on a 5-year bond, and thus don't care for the Treasuries. Corporate bonds are generally safer than stocks because, in bankruptcy, all your bondholders have to be paid in full before any equity-holders get a penny. Stocks are much more volatile, since they're essentially worth the value of their profits after paying all their debt, taxes, and other expenses.  As far as stocks are concerned, they're not very good for the short term at all. One of the stabler stock funds would be something like the Vanguard Equity Income Fund, and it cautions: This fund is designed to provide investors with an above-average level   of current income while offering exposure to the stock market. Since   the fund typically invests in companies that are dedicated to   consistently paying dividends, it may have a higher yield than other   Vanguard stock mutual funds. The fund’s emphasis on slower-growing,   higher-yielding companies can also mean that its total return may not   be as strong in a significant bull market. This income-focused fund   may be appropriate for investors who have a long-term investment goal   and a tolerance for stock market volatility. Even the large-cap stable companies can have their value fall dramatically in the short term. Look at its price chart; 2008 was brutal. Avoid stocks if you need to spend your money within a couple of years. Whatever you choose, read the prospectus to understand the risks. To my knowledge, the only bond ever issued by a notable state into perpetuity was the Bank of England...and it was a miserable mess for all the obvious reasons.  Edit : They were called consuls, and it appears i was wrong about them being catastriphic for the BOE. I'm sorry, i guess i must be cruising the permabear backwoods or something. Here's some interesting links i found.  http://en.wikipedia.org/wiki/Consols  http://www.immediateannuities.com/annuitymuseum/annuitycertificatesofthebankofengland/consolidatedannuities/  http://www.economist.com/blogs/buttonwood/2012/03/debt-crisis-0?fsrc=scn/fb/wl/bl/hundredyearsofsolvency GIC perhaps? These would be quite similar to Certificates of Deposit where one is agreeing to lock up their money for a term and be paid a percentage for doing so. There are various kinds as some may be linked to market returns in some cases and others are just simple interest. You're mixing up two different concepts: low-risk and recession-proof. I'll assume I don't need to explain risk: there is always risk, regardless what form you keep your assets in. With bonds, the interest rate is supposed to reflect the risk. If a company offers bonds with too low an interest rate for the risk level, few people will buy them. While if a company offers bonds with too high an interest rate for the level of risk, they are gypping themselves. So a bond is a slightly more transparent investment from a risk assessment perspective, but that doesn't mean the risk is necessarily low: if you buy a bond with a 20% effective annual yield, that means there is quite a high risk that the underlying company will fold (unless inflation is in the double-digit range as well, in which case a 20% yield is not that much). Whereas with a stock, no parameter directly tells you anything about the risk. Recession-proof is not the same thing as low-risk. Recession-proof refers to investing in (or holding debt for) industries that perform better in a recession. http://www.investopedia.com/articles/stocks/08/industries-thrive-on-recession.asp. "From what I've heard in the past, debt can be differentiated between secured debt and unsecured debt.   Secured debt is a debt for which something stands good such as a mortgage on your house.  You have a debt, but that debt is covered by the value of an asset and if you needed to free yourself of the debt, then you could by selling that asset.   This is what is known as ""good"" debt.   Unsecured debt is debt that is incurred where the only thing that is available to pay it back is your income.  An example of this is credit card debt where you purchase something that couldn't be sold again to pay off the debt.   This is know as ""bad"" debt. You have to be careful about thinking that house debt is always ""good"" debt because the house stands good for it though.  The problem with that is that the house could go down in value and then suddenly your ""good"" debt is ""bad"" debt (or no longer secured).  Cars are very risky this way because they go down in value.  It is really easy to get a car loan where before long you are upside down.    This is the problem with the term ""good"" debt. The label makes it sound like it is a good idea to have that debt, and the risk associated with having the debt is trivialized and allows yourself to feel good about your financial plan.  Perhaps this is why so many houses are in foreclosure right now, people believed the ""good"" debt myth and thought that it was ok to borrow MORE than the home was worth to get into a house.  Thus they turned a secured debt into an unsecured debt and put their residence at risk by levels of debt they couldn't afford. Other advice I've heard and tend to agree with, is that you should only borrow for a house, an education and maybe a car (danger on that last one), being careful to buy a modest house, car etc that is well within your means to repay.   So if you do have to borrow for a car, go for basic transportation instead of the $40,000 BMW.  Keep you house payment less than 1/4th of your take home pay. Pay off the school loans as quickly as possible. Regardless of the label, ""good"" ""bad"" ""unsecured"" ""secured"", I think that less debt is better than more debt.   There is definitely such a thing as too much ""good"" debt!" "There's actually a lot of smaller questions in your question, so I'll answer just a few here. The standard bond index for high yield corporates is the Barclays Capital High Yield Corporate index, which is the basis for JNK.  I am not familiar with the index behind HYG, the ""iBoxx $ Liquid High Yield index."" The ETFs are managed quantitatively to try to track the index as closely as possible.  AFAIK these ETFs do not attempt to take active positions. New issues are typically purchased with cash which is constantly coming in from interest and principal payments from other bonds.  There is rarely a need to sell bonds just to buy new issues.  Selling bonds is more common when a fund is experiencing redemptions. These ETFs and the high yield bonds they buy are not derivatives (your question seems to be confused on that point). The US Treasury is not directly involved in any way.  They are indirectly involved, as they are indirectly involved in US equities markets or world markets for that matter, although perhaps they have greater influence in the bond world. Moody's has extensive studies of default rates by ratings." Series I Savings Bonds would be another option that have part of their return indexed to inflation though currently they are yielding 1.64% through April 30, 2016 though some may question how well is that 3% you quote as an inflation rate. From the first link: Series I savings bonds are a low-risk savings product. While you own   them they earn interest and protect you from inflation. You may   purchase electronic I bonds via TreasuryDirect or paper I bonds with   your IRS tax refund. As a TreasuryDirect account holder, you can   purchase, manage, and redeem I bonds directly from your web browser. TIPS vs I Bonds if you want to compare these products that are rather safe in terms of avoiding a nominal loss. This would be where a portion of the funds could go, not all of them at once. "In addition to the advice of @karancan, If you wish to stay strictly with GICs, there are better ways to find good GIC rates, than looking at advertising from institutions you are already dealing with. This site, http://www.globeinvestor.com/servlet/Page/document/v5/data/rates?order=d&pageType=gic_long&sort=IR1&page=1&tax_indicator=N (among others) display impartial GIC rates for many institutions and terms of investment, in sortable form. Many of these institutions allow on-line purchases and transfers, requiring only a ""regular"" bank account as a source/destination for on-line transfers..." Yes this would be the same as when a corporation sells bonds. If it is the same as you describe. A product page would make it possible to give you a definitive answer. Also I strongly advice against taking out this type of loan if not for investment