Protecting Your Retirement with Bonds
The value of mutual funds, stocks, and other securities can fluctuate dramatically, but high-quality bonds offer a guaranteed rate of return. They also provide passive income, with low risk, and their value will typically increase at a time when other asset classes are declining.
By holding a mix of both bonds and stocks in your portfolio, you can reduce the amount of volatility you experience as an investor. Bonds might not provide as much bang for your buck, compared to stocks, but they are less likely to lose their value.
Holding bonds can reduce your losses during stock market declines. Generally, when stocks go down in value, bonds will go up. This is the same for interest rates; a decline will make your bond more valuable, which means that it can be sold at a premium. Your Carte Financial Advisor can show how this could work to your advantage.
In a retirement portfolio, bonds help balance your investment allocations and provide a source of passive income. They offer a fixed coupon rate (the interest rate) which is paid on a dependable schedule. This can be ideal for investors who are depending on reliable income.