Benefits of Buying Bonds

  • As an investor it is always advisable that you should definitely include ‘bonds’ in your investment portfolio. It has been found that most individual investors underperform the market. So, it is better for you to invest in a globally diversified portfolio of low management fee index funds in an asset allocation appropriate for you. This will help you to gain better returns. Bonds offer certain unmatched benefits to the investor such as follows:
    • Diversification = Bonds prove to be a good source of adding diversification to your portfolio to have a mix of various kinds of investment instruments in your investment portfolio.
    • Predictable Income = Bonds prove to be a great source for receiving a predictable income as each bond comes with a promise from its issuer that they will pay certain amounts to the bond owner.
    • Profit on Price Change = Bonds offer a good chance to gain profit on price changes as the investor tends to gain when the price of the bond changes with the market.
    • Lower Risk = Bonds are a great investment instrument for the investor who is averse to taking high risks. As bonds come with a promise from the issuer of the bond to pay to the bond owner, the amount of risk of investing in bonds is extremely low.
    • Matching Time Horizon = Bonds are available of varying mature dates. So, the investor who buys a bond can choose a suitable one whose maturity matches the time period for which the investor wants to invest his money.
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