Why bonds?
At Raymond James, we believe bonds can play an important role in a well-diversified portfolio. Bonds have the potential to provide predictable income and, most important, help preserve principal*. Also bonds may help minimize overall volatility.
Who invests in bonds?
Bonds have the potential to benefit an investor’s portfolio in a variety of ways. For retirees, bonds may provide a predictable income stream and lower volatility of capital. For other investors, bonds can help meet future wants or needs, such as vacations, college funding or the purchase of a house.
How much to allocate to bonds?
Bond allocation depends on many factors, including an investor’s time horizon, risk tolerance, need for income and future goals. In most cases, as investors age, they grow more dependent on income from their portfolios and become more risk averse. Bonds can help ease specific concerns that arise when investors move from one stage of their financial journey to the next. Consult your financial advisor to determine what portion of your portfolio should be devoted to bonds based on your specific investment objectives.
There are special risks associated with investing with bonds such as interest rate risk, market risk, call risk, prepayment risk, credit risk, reinvestment risk, and unique tax consequences. To learn more about these risks and the suitability of these bonds for you, please contact our office.
*If held to maturity, subject to issuer credit risk.