Why Invest in Bonds? 4 Truths to Consider

In the world of high stakes investing, one should ask the question, "Why invest in bonds?" It might seem boring, or dull investing, but in reality they can provide some great benefits and security.

Diversity

While stocks are a very versatile investment vehicle, when combined with bonds they can give you a more stable investment portfolio. This is best seen in a bear market when some double digit losses can be offset by the returns on the bonds.

Income

A savings bond will pay interest on a regular basis. This makes a good income for some people, like those who have retired.

Security

Besides having cash, a treasury bond is a safe place to put your money. A short term bond is a good place to park some money for awhile and still earn a little return.

Tax Free

There are certain bonds that earn a tax free income. These types of bonds will generally pay lower yields than a taxable type of savings bond, it is a great option for those in a higher tax bracket.

Although there is some risk involved in bonds, when you think of why invest in bonds, you can see that there are many benefits to it also.

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