Which bond gives the highest return?

Bonds with non-investment-grade ratings (also called junk bonds) typically offer the highest return potential. They tend to offer a higher fixed-income yield than investment-grade, municipal, and government bonds. In addition, they offer some appreciation potential if the underlying company receives a credit rating upgrade, making the bonds less risky. Convertible bonds (bonds that can convert into stock) also have high return potential if the value of the company's shares rises.

What bonds make you the most money?

Non-investment-grade bonds (i.e., junk bonds) have the potential to deliver the highest returns due to their higher yields. However, they have a higher risk of default. Convertible bonds (i.e., bonds that can convert into stock) can also be big moneymakers if the underlying stock delivers significant price appreciation.

What type of bond is the best to buy?

The best type of bond to buy is a U.S. Treasury bond. They're virtually risk-free investments backed by the U.S. government.

Are bonds suitable for retirement or income-focused portfolios?

Bonds are ideally suited for retirement and income-focused portfolios. They're lower-risk investments than stocks, increase a portfolio's diversification, and provide a relatively stable income stream.

8 Best Bonds to Invest in for the Long term (2026)

Learn about the best ways to invest in bonds.

By Matthew DiLallo – Updated Aug 14, 2026 at 2:26 PM EST | Fact-checked by Frank Bass

Key Points

U.S. Treasury bonds, like 10-year notes, offer a safe, stable investment.
26-week Treasury bills are ideal for short-term cash investments, offering higher rates than shorter maturities.
The iShares iBoxx Investment Grade Corporate Bond ETF allows for easy investment in diverse, high-quality corporate bonds with competitive yields.

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Top bonds to consider in 2026

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Source: CNBC, Treasury Direct, and company websites. Note: Yields as of August 14, 2026.
Name	Ticker	Yield	Description
10-year Treasury note	Benchmark	4.7%	Benchmark Treasury bond
26-week Treasury bills	N/A	3.9%	Six-month Treasury bill issued by the U.S. Treasury
iShares iBoxx Investment Grade Corporate Bond ETF	(NYSEMKT:LQD)	4.7%	Fund holding investment-grade-rated corporate bonds
Vanguard Tax-Exempt Bond ETF	(NYSEMKT:VTEB)	3.7%	An index fund that tracks investment-grade municipal bonds
Vanguard Short-Term Corporate Bond Index Fund	(NASDAQMUTFUND:VSCSX)	4.8%	Fund that tracks the Bloomberg 1-5 year corporate bond index
Guggenheim Total Return Bond Fund	(NASDAQMUTFUND:GIBCX)	4.6%

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1. 10-year Treasury note

If you're looking for a straightforward bond investment, it's hard to beat Treasuries. U.S. Treasury bonds are considered the safest in the world, and most investors generally regard them as risk-free. The 10-year rate is a benchmark used to set other interest rates, including mortgage, auto loan, student loan, and credit card rates.

Treasury yields tend to be highly correlated with the federal funds rate, so they are likely to move in step with the Federal Reserve's rate adjustments.

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2. 26-week Treasury bills (T-bills)

If you're looking for a place to park your cash for the short term, T-bills are the gold standard. The U.S. government issues these shorter-duration securities. They differ from Treasury notes and bonds in that they don't pay interest. Instead, the U.S. Treasury sells T-bills at a discount and redeems them at their face value at maturity.

The Treasury sells T-bills that mature in four-, six-, eight-, 13-, 17-, 26-, and 52-week terms. The 26-week term is a popular option because it typically offers a higher interest rate than shorter-term notes.

3. iShares iBoxx Investment Grade Corporate Bond ETF

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NYSEMKT: LQD

iShares Trust - iShares iBoxx $ Investment Grade Corporate Bond ETF

Today's Change

(0.67%) $0.71

Current Price

$106.55

Key Data Points

AUM

$34B

Dividend Yield

4.65%

Expense Ratio

0.14%

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Investment-grade corporate bonds tend to offer higher yields than government bonds. While they're not "risk-free" like 10-year Treasury notes, they tend to be lower-risk bonds backed by companies with investment-grade bond ratings.

The iShares IBoxx Investment Grade Corporate Bond ETF makes it easy to invest in high-quality corporate bonds. This bond ETF provides access to over 3,160 investment-grade bonds through a single fund. This bond fund had a trailing 12-month yield of more than 4.7% in mid-2026 and charges a low ETF expense ratio of 0.14%.

4. Vanguard Tax-Exempt Bond ETF

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NYSEMKT: VTEB

Vanguard Municipal Bond Funds - Vanguard Tax-Exempt Bond ETF

Today's Change

(0.25%) $0.13

Current Price

$49.66

Key Data Points

AUM

$49B

Dividend Yield

3.42%

Expense Ratio

0.03%

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State and local governments issue municipal bonds to fund their operations and projects. They offer investors a way to earn interest income with the bonus that the interest is exempt from federal taxes. That makes them ideal bond holdings in a non-retirement account.

The Vanguard Tax-Exempt Bond ETF tracks the performance of investment-grade municipal bonds. The fund holds roughly 10,570 securities and offered a yield of about 3.7% in mid-2026. It had an ultra-low expense ratio of 0.03%.

5. Vanguard Short-Term Corporate Bond Index Fund

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NASDAQMUTFUND: VSCSX

Vanguard Scottsdale Funds - Vanguard Short-Term Corporate Bond ETF

Today's Change

(0.00%) $0.00

Current Price

$0.00

Key Data Points

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Short-term bonds offer some advantages over long-term bonds, depending on your investing needs. Because of the shorter duration of short-term bonds -- considered to have maturities of five years or less -- they have less interest rate risk and are more likely to preserve the principal.

The Vanguard Short-Term Corporate Bond Index Fund holds around 3,020 bonds from a range of blue chip companies such as Bank of America (BAC -1.74%), CVS Health (CVS -1.04%), and AbbVie (ABBV +2.77%). It aims to track the Bloomberg U.S. Corporate 1-5-Year Index. The bond mutual fund offered a yield of 4.8% in mid-2026 and had an expense ratio of 0.06%. Vanguard also offers a similar ETF (Vanguard Short-term Corporate Bond ETF (NYSEMKT:VCSH) with an even lower 0.03% expense ratio.

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6. Guggenheim Total Return Bond Fund

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NASDAQMUTFUND: GIBIX

Guggenheim Funds Trust - Guggenheim Total Return Bond Fund

Today's Change

(0.00%) $0.00

Current Price

$0.00

Key Data Points

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A total return bond fund differs from a typical bond fund in that it generates returns through both coupon payments and rising bond prices. Bond prices typically rise when yields fall, which is generally determined by central banks and macroeconomic forces. Another driver is an improvement in the bond issuer's credit rating, which lowers its borrowing costs. As a result, yields on existing bonds fall, driving up their value.

The Guggenheim Total Return Bond Fund holds a portfolio of approximately 2,085 bonds, including Treasuries, municipal bonds, and corporate bonds. While the fund primarily invests in investment-grade bonds (2.37% U.S. government and 58.4% BBB or higher), it also holds some higher-yielding junk bonds (9.2%) and unrated debt (4.4%). The fund had a distribution yield of 4.6% as of mid-2026. The C-class shares (GIBCX) of this bond mutual fund charge a 1.51% expense ratio, though they don't have a front-end sales charge. Meanwhile, A-class shares (GIBAX) have a lower annual expense ratio of 0.76% but a high 4% front-loaded sales charge.

7. Vanguard Total International Bond Index Fund

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NASDAQ: BNDX

Vanguard Charlotte Funds - Vanguard Total International Bond ETF

Today's Change

(0.16%) $0.08

Current Price

$47.67

Key Data Points

AUM

$123B

Dividend Yield

4.57%

Expense Ratio

0.07%

Top Holdings

DXBGY

0.00%

ALSMY

0.00%

NVS

0.00%

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If you're looking for diversification from your bonds, there's no reason to stay within U.S. borders. Emerging markets can offer some of the best opportunities for high-yield investors, so it's worth considering international bonds, such as the Vanguard Total International Bond Index Fund.

The fund's top holdings are European government bonds (58.3%), although it holds about 6,800 different bonds, largely investment-grade. It tracks a Bloomberg index adjusted to exclude U.S. bonds. This bond ETF had an expense ratio of 0.07% and a yield of 3.6% in mid-2026. Vanguard also offers a similar mutual fund (Vanguard Total International Bond Index Fund Admiral Shares (VTABX +0.00%)) with a $3,000 minimum investment and a 0.10% expense ratio.

8. Fidelity Short-Term Bond Fund

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NASDAQMUTFUND: FSHBX

Fidelity Salem Street Trust - Fidelity Short-Term Bond Fund

Today's Change

(-0.12%) $-0.01

Current Price

$8.42

Key Data Points

Day's Range

$8.42 - $8.42

52wk Range

$8.42 - $8.42

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If you're interested in short-term bonds, the Fidelity Short-Term Bond Fund is one of the best options. It invests in both short-term Treasury bills and corporate bonds issued by financial giants such as Bank of America, JPMorgan Chase (JPM -1.71%), and Wells Fargo (WFC -1.64%). It also invests in asset-backed securities such as mortgages and car loans. Its portfolio had around 480 holdings with a weighed average maturity of a little more than two years.

The fund's managers aim to have an overall interest rate risk profile similar to that of the Bloomberg Barclays U.S. 1-3 Year Government/Credit Bond index. The bond mutual fund has a 0.3% expense ratio and yielded 4.5% in mid-2026.

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How to choose the best bond

Investors have a multitude of choices when it comes to bonds. You can invest in U.S. government bonds, corporate bonds (investment-grade and junk), or international bonds. Investors can either buy bonds directly in their brokerage accounts or invest in a bond fund (ETF or mutual fund). With so many options, it can be hard to choose the best bonds to buy. Here are some factors to consider:

Active or passive: You need to decide whether you want to actively manage a portfolio of directly held bonds or passively invest in a bond fund.
Maturity: Short-term bonds are less susceptible to interest-rate changes than longer-dated bonds. However, long-term bonds tend to have higher interest rates.
Issuer: Bond issuers such as the U.S. government or an investment-grade corporation offer less risk than some foreign countries or a company with a non-investment-grade credit rating.
Taxes: Some bonds have tax advantages. For example, federal government bonds are typically exempt from state and local income taxes. Meanwhile, municipal bonds are exempt from federal taxes and state taxes in the state that issued the bond.
Costs: If you invest in a bond mutual fund or ETF, make sure you understand the fees. A high-cost fund can erode the interest income generated by its bond holdings.

Which type of bond is right for you?

Here's how you can determine the most suitable type of bond for your portfolio based on your risk tolerance:

Conservative and more risk-averse: Treasury bonds, as well as highly rated investment-grade municipal and corporate bonds, would be most suitable for a conservative investor.
A more moderate risk tolerance: Treasuries, municipal bonds, investment-grade bonds, and high-yield bond funds would offer the right mix of risk and returns for a more moderate investor.
More aggressive and risk-tolerant: Lower-grade corporate, emerging-market, junk, and convertible bonds offer higher income and total-return potential for risk-tolerant investors.

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FAQ on investing in bonds

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About the Author

Matt DiLallo has been a contributing Motley Fool stock analyst specializing in the energy, industrials, and real estate sectors since 2012. He also covers dividend-paying stocks, pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

Bank of America is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Matt DiLallo has positions in JPMorgan Chase. The Motley Fool has positions in and recommends AbbVie and JPMorgan Chase. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

Bests Bonds to Invest in for the Long Term (2026)

Learn about the best ways to invest in bonds.

Key Points