Bonds, also known as fixed income securities, offer some important benefits that can help your investment portfolio stay on track to meet your goals.
Whether you want to balance risk within your portfolio or establish a steady income stream, bonds may be the answer.
Key among these benefits is income generation. Bonds are issued by companies and government entities and generally pay a stated interest rate. Bonds that are higher quality and/or have shorter maturities usually offer lower interest rates
Additionally, bonds have historically offered greater stability than stocks which can help smooth out portfolio performance in more volatile markets.
There are multiple ways to buy bonds. You can buy individual bonds on the date they are issued, usually for the bond’s face value, or in the secondary market. After bonds are initially issued, their value will fluctuate based on market conditions. You can also buy mutual funds that have a bond component or work with a money manager who integrates fixed income into their separately managed portfolios.