So far, I've invested exclusively in stocks. My portfolio is pretty diverse because of the mutual funds that I have bought into, but I'm wondering if I should consider diversifying a bit more and looking into fixed-income securities.
Is now a good time to buy bonds, whether corporate or treasury? Interest rates have been going up in order to combat inflation, haven't they? The interest rates that I can find on US treasury bonds put them in the mid-4% range, depending on when they mature. That looks like the highest we have seen since before 2008. Is that a "good" rate relative to future inflation?
Or should I look into corporate bonds with good credit ratings? I can find rates around 5% for the longest term purchases. Would the higher rate of return be worth the increased potential risk?
Also, there are some basic things that I still don't fully understand about bonds. If I buy them now, am I guaranteed to lock in that rate until the term expires, even in the event of a future rate cut?
And how does collecting on the interest work? If I buy $10,000 worth of 30-year bonds at a 5% rate, does that mean that I would get $500 every 6 months for 30 years, plus the promise of getting the initial ten grand back at the end? And is a dividend rate like that worth the opportunity cost of keeping that money in stocks?
My stock investments have done quite well over the last few years, and so I figured that it might be nice to "store" some of those capital gains to have them generate some passive income, as well as to have a small hedge against future downturns. But on the other hand, my investment horizon will last for decades, so I can afford to weather some of those downturns.
Also, what about CDs? How do they differ from bonds, and should I consider buying into those instead of/in addition to bonds? What would you all do in my position?