Stick With Bonds

We have been receiving many client inquiries concerning our recommended holdings in bonds. Our general answer is don’t panic; bonds are not meant to be the earnings generator in your portfolio. They are meant to provide stability and diversification and provide some sort of insurance for your portfolio in a severely down market.

Example: When stocks went down from 2007 to 2009 by -50.8%, Bonds went up by 6.2%, during the same time. This is a differential of 57%. (Resource: Having the proper balance of bonds in your portfolio at that time, would have basically saved your portfolio a bunch.

Bill Gross, the founder of PIMCO, the largest bond fund in the world, gives his perspective: “A significant portion of an institutional or individual’s portfolio will always require bonds.”

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Certified Financial Planner, CFP, Fee-Only
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