Whether you are swimming in excess wealth or accumulating wealth, the advice to grow your investment in bond markets is the same.
For starters, investors are often well served by considering diversified mutual funds or ETF’s that offer comprehensive exposure to the global bond markets, while staying in the short-term and investment grade.
Short-term and investment grade means that you are not bearing the avoidable risk of longer-term bonds – a lot can go wrong over long periods of time – and you are not bearing the avoidable risk of Junk Bonds – when a bond has become a Junk Bond, a lot has already gone wrong!
These funds own thousands of bonds issued by companies domiciled all over the globe with exposure to many yield curves and currency fluctuations.
Having bonds in your portfolio serves many purposes.
One purpose would be to have a source of liquidity that shouldn’t exhibit the volatility of stocks; hence, you can use your bonds for currency by selling them when or if you need money.
Another purpose might be that, held in the manner we recommend, it is reasonable to expect that over the long-haul your bonds will out-perform both cash and inflation.
Additionally, bond market returns are not highly correlated with stock market returns. The fact that bonds don’t usually fluctuate in value as much as stocks means holding a purposeful amount of bonds should lessen the volatility of your overall portfolio.
Regardless of your view of the bond market, holding bonds in a massively diversified, short-term and investment grade manner with comprehensive exposure to global bonds can be a purposeful strategy.
Interested in discussing this? We welcome your phone call, text or email.
