Unless you know how to invest in the best bond funds for 2012 don’t invest in bond funds at all. For thirty years these funds were a great way to earn higher interest with only moderate risk, but the game has changed. Invest in the wrong funds now and 2012 and beyond could be a financial disaster waiting to happen.Our Government has driven interest rates down to levels not seen in over 50 years, in an attempt to stimulate a struggling economy. This makes what used to be the best bond funds for safety a poor investment today. These funds invest in U.S. government securities: notes and bonds. If you invest in these funds today you will be lucky to earn 2% in interest income, and could end up losing money for years as the share price of these funds lose value. Let’s look at how to invest for higher income for 2012 and beyond with less risk.There are three ways to invest in bond funds to increase your interest income, and two of them involve higher risk. The first way to get higher interest income is to invest in long term funds that invest your money in debt securities (bonds) that mature in 20 to 30 years. This is the riskiest thing you can do today, because long term funds will take a beating when interest rates eventually turn around and go back up. This is called “interest rate risk”, and above all else you want to control this, because this is the primary risk facing bond funds today. When interest rates go up bond prices fall, and long term issues get hit MUCH WORSE than shorter term securities and the funds that invest in them.The first key to how to invest in the best bond funds for 2012 is to avoid the high risk of long term funds, and go with INTERMEDIATE term funds that invest in debt securities maturing in 5 to 10 years. Remember, interest rate risk is by far the greatest risk for bond investor for 2012 and beyond.The second key to how to invest in bonds for 2012 is to avoid funds that invest in the highest grade or safest debt securities, especially those that invest in U.S. Treasury securities. At today’s interest rates you won’t even earn 2% interest (before expenses) in these intermediate term funds. The best bond funds to invest in to significantly increase your interest income without significantly increasing your risk: funds that invest your money in medium to high quality corporate bonds. Corporate America is in good financial shape, so there is little risk of default when you own a small part of a large diversified portfolio of these securities.The third and best way to increase your interest income from bond funds in 2012 and for years to come involves no extra risk whatsoever. Every dollar you can cut from fund costs and expenses translates to money in your pocket. You can pay sales charges (loads) of 3% or more to invest with yearly expenses of more than 1% every year, plus additional charges and fees if you invest in the wrong funds. That doesn’t make much sense when you are simply trying to earn 3% or 4% (before expenses). The best bond funds charge zero in sales charges and less than ¼% a year for expenses. They are called NO-LOAD funds, and are offered by some of the biggest and best fund companies in America. The simplest key to how to invest in bond funds is to always keep your cost of investing at a minimum.In summary, the best bond funds to invest in for 2012 and beyond are NO-LOAD, MEDIUM to HIGH QUALITY CORPORATE, INTERMEDIATE TERM bond funds. That’s your best way to invest and earn a respectable interest income without taking on more risk than most folks want to accept.