Fairway Bond

The goal of any good tee shot is to keep it on the fairway; we want to keep it between the rough sections, and on course toward its goal.

Fairway bonds kind of operate on the same premise. A fairway bond is a special little bond that is attached to a floating interest rate. What this means is that people who own them can make extra coin on them as long as that interest rate stays within a certain range between the date that they buy it and the date that the bond matures.

These bonds are a pretty good deal for the more conservative investing crowd out there. Worst case scenario, the interest rate doesn’t stay in its specified range (i.e., on the fairway), and when the bond matures, all you get is your money back. Boo. Best case scenario, if you buy one of these puppies because you think the interest rate is going to rise into your specified range, and then it does, you can make a pretty penny on your investment and get the value of the bond itself back when it matures. And then you don't have to throw your club into a tree.