Why not invest 100% of your portfolio into stocks or exchange traded funds(ETFs)? Each investor has their own financial goals, risk tolerance and strategy to reach those goals. Jonathon Clements for The Wall Street Journal reports that a portfolio with bonds may cut down on returns, but the loss can be minimal and price gyrations sharply reduced. Clements goes on to explain different scenarios with portfolios invested in fixed income.
If holding bonds in your portfolio doesn’t sound exciting, then it is important that you set up some sort of exit strategy and stick to it. Set stop-losses and get out when you say you will. Then re-evaluate things when it is time to get back into the market.
Holding on to your money, growth and less volatility can be important factors for a portfolio. Having 100% invested in stocks may not be the best way to avoid the volatility.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.