Transcript: Why Own Bonds Video

I talk to all kinds of investors with a variety of investments goals. and, many have been asking, "should I have bonds in my portfolio?" It's a question I hear a lot these days. And, considering the strong performance of stocks over this past year, it comes as no surprise. But, even though bonds might not offer as much return as stocks, they do bring stability to an investor's portfolio by providing a buffer to stock price volatility. Here's two very simple reasons why: bonds are less likely to lose money than stocks, and bonds can provide a steady stream of income from the interest they earn. Bonds come in many forms. But, high quality bonds, issued by reliable corporations, municipalities, institutions and the federal government can be among the most stable investments you can own. When you buy a high quality bond, you're loaning your money to the issuer for an agreed length of time. In return, you can earn regular interest on your loan, and get the whole loan amount paid back at the end of the term. So, because bonds can provide income and preserve your principal investment, many people use bonds to help smooth out the ups and downs in their portfolio returns. You know, the stock market is hard to predict. Sell offs can come without warning. Investing in bonds can help guard your investments from this potential volatility, and are an important part of a well-diversified asset allocation. So, even though bonds probably won't contribute as much overall return as stocks, we still think you should have bonds in your portfolio. Want to know more about the advantages of having fixed income investments? Ask for my special report: "Why Own Bonds".