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Diversifying and Bond Laddering
Diversifying and Bond Laddering - Trends
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Bonds provide more secure income for an investment portfolio, while stocks provide more growth potential. When you include bonds in your portfolio, you do so to have more income and less risk than you would have with just stocks. Bonds also diversify the portfolio. Because debt is so fundamentally different from equity, debt markets and equity markets respond differently to changing economic conditions. If your main strategic goal of including bonds is diversification, you can choose an active or passive bond selection strategy. As with equities, an active strategy requires individual bond selection, while a passive strategy ...
The bond and bond-related exchange traded fund (ETF) markets have experienced quite a year, but the good times may soon come to an end. The specter of inflation and likely hikes in interest rates may cut away at hefty returns seen in recent months. A bond is a loan that a bond purchaser makes to a company, as stated in American Chronicle . Thomas E. Murphy, certified financial planner at TEMAA Financial, says bonds serve to reduce volatility in a portfolio while generating income – the quarterly, semi-annual or annual fixed income is generally more than dividend payments from stocks. [ Read More