InvestorQ : Is it true that bonds give stability to your overall portfolio mix and also to your financial plan?
Dilmini Mercia made post

Is it true that bonds give stability to your overall portfolio mix and also to your financial plan?

Answer
user profile image
Dawn Cherian answered.
1 year ago


Let us first understand what role bonds (debt) play in your overall portfolio mix. Equities are a must in your portfolio for the sake of growth and wealth creation but that alone is not enough. It also requires an element of stability and predictability that only comes from debt. When you invest in bonds or in bond funds, the returns may be lower than equities but these returns are more stable and you can count on these returns. With debt in your portfolio your immediate milestones are safe and less volatile.