Bonds are loans to governments or companies that pay you interest. They usually move more gently than shares, which is why they are often used to add stability and soften the ups and downs of a portfolio.
Its role in a portfolio
Bonds act as a portfolio shock absorber. They typically grow more slowly than equities, but their steadier behaviour can make the overall ride easier to stick with.
Which profiles lean into it
Preservation and balanced-income profiles lean on bonds the most; growth profiles hold a smaller cushion. They rarely disappear entirely except in the most aggressive examples.
Key terms: Yield · Fixed Income · Interest Rate
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