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Low bank rates, especially on CDs, are being used by financial product salespeople to sell other, riskier investments, such as stocks and bonds.

Wait a second. Bonds are risky?

Not necessarily risky, no, but bonds are by no means the “safe haven” that many savings investors suppose–and many salespeople propose.

In fact, it’s entirely possible that there is a giant bubble in bonds right now. There could even be some trouble in the Triple A, supersafe world of government bonds.

If interest rates rise, bondholders may be in for some unpleasant surprises over the next couple years. When interest rates go up, bonds that are paying lower interest rates become worth less.

It is thus highly possible to lose money in bonds, especially in an environment of rising interest rates. Yes, you can still count on the yield, but the value of the bond itself is less, because other bonds with higher interest rates are now available.

A bond, of course, is a promise to repay a debt at a certain interest rate over a certain time period. Frustrated by low rates on CDs and money market accounts, conservative savings investors have moved significant sums of money into bonds over the past two years.

At Goldman Sachs, for example, fourth quarter 2009 revenues from the fixed income division (read: bonds sales) are expected to be around $6.8 billion, as opposed to $4 billion in the fourth quarter of 2008, according to BusinessWeek.com.

This is not to say that bonds cannot be a good investment. They certainly can. However, the vast majority of bonds are not nearly as safe as an FDIC-insured CD, money market account, or savings account.

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