Investing: Why Are Bonds Important? [Video]
by Financial Design Studio, Inc. / April 9, 2020The 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.
Ready to take the next step?
Schedule a quick call with our financial advisors.
Recommended Reading
How Will DOGE Impact the Market and Economy?
The Department of Government Efficiency “DOGE” is expected to have a significant impact on markets and the economy. For starters, it’s possible that a significant cut-back in spending will create a recession. We explore this possibility, along with other ways that DOGE could impact the U.S. budget deficit, Social Security, future tax rates, and more....
Do I Own Too Much Company Stock?
Do I own too much company stock? Corporate executives have lots of opportunities to accumulate stock in their company. Stock-based compensation and employee share purchase plans are some of the ways an executive can build wealth in their employer. But how much company stock is too much? This post helps you assess exactly how much...
Financial Design Studio, Inc.
We are financial advisors in Deer Park and Barrington, IL. A team with a passion for helping others design a path to financial success — whatever success means for you. Each of our unique insights fit together to create broad expertise, complete roadmaps, and creative solutions. We have seen the power of having a financial plan, and adjusting that plan to life. The result? Freedom from worrying about the future so you can enjoy today.