The Stockmarket has had a number of good years this past many years. So strong in fact it can be easy to forget the value of having bonds in your stock market portfolio. So why are bonds important? The stock market tends to go up and and down, go from a bull to a bear markets.
The great part about having bonds is it helps the overall volatility of your portfolio so you can stay invested in those scarier moments when the stock market is going down. Stocks are great because they give you great returns.
But the trade off is that you have to take more risk to get those better returns.
Conversely, bonds give you a lower return historically than stocks do they have a much lower volatility than stocks.
So we always recommend whether you have short term or long term, you always have some allocation toward bonds. That way if the stock market has a volatility of 20-30%, the value of your investments won’t go down too much.
Have questions we can answer about the state of the market? Contact Financial Design Studio, Financial Advisors in Deer Park.
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