A clear, practical guide for beginners on why, when, and how to include bonds in your investing strategy.
Why Add Bonds to Your Investing Portfolio?
Stability: Bonds are less volatile than stocks
Diversification: Bonds often move differently than stocks, reducing overall risk
There’s no one-size-fits-all answer. But here are key times when adding bonds makes sense:
2. When You’re Investing for a Goal with a TimeframeIf you’re investing for something specific — like a home down payment in 2–3 years — adding bonds can reduce the chance of losing money right before you need it.
4. When Stock Markets Are Expensive or VolatileWhile timing the market is hard, some investors add more bonds during periods of extreme market valuations or uncertainty.
How Much Should You Invest in Bonds?
A common rule of thumb: Your age=the percentage of your portfolio in bonds.
Age 25 → 25% bonds, 75% stocks
This is not a strict rule — it’s a starting point. Younger investors may choose to hold fewer bonds early on and increase exposure over time.
For Beginners:
Bond ETFs: Easy to buy, diversified instantly (e.g., BND, AGG)
Always consider credit quality, interest rate risk, and your personal investing goals.
Common Investing Mistakes to Avoid with Bonds
Ignoring fees in bond mutual funds and ETFs
Buying junk bonds without understanding the risks
"Stocks help you grow your money. Bonds help you protect it. Smart investing means knowing when to lean on each."
Beginner's Guide to Bond ETFs and Mutual Funds
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This article was written by Itai Levitan at www.forexlive.com. Read More Details
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