Investing in bonds is risk free. Investing in stocks is much riskier. Why do you think financial advisors suggest that it's a good idea to own both stocks and bonds?

Question

saria · Answer

Probably because there is more commission in bonds. A quality bond is relatively secure as to capital and small interest and will perform best when investors are more risk averse. Or when interest rates are high and one wants to lock in those rates. Basically the bond element of a portfolio is supposed to give some stability against market movements (especially downwards). Of course if someone wants safe income like an elderly widow, for example, then bonds will be a much more suitable investment than equities. Bonds are not risk free! Unless you mean something like NSI products

fwval · Answer

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