Why Your Portfolio Needs Bonds
At the simplest level, an investment portfolio generally consists of three components: cash, stocks and bonds. You need to hold bonds in your portfolio for a number of reasons, primarily for capital preservation and yield; this article will look at these points in more detail. A bond is an obligation used by large entities to raise money; it’s similar to a loan. In exchange for borrowing funds over a predetermined period of time, the issuer pays a coupon, or interest, to the bondholder over the life of the bond. At the end of that period, the bond’s maturity date, the…
