Blending Stocks With Bonds - A Risk Free Investment Option

Every investor should consider bond investmentsare a much safer investment instrument. This
in their portfolio as it plays an important role insafety and stability of bonds act as a counter to
maintaining a well balanced portfolio. A bond is anthe fluctuations common to stocks. That is why it
"IOU" issued by a corporation, government ormakes sense when an investor is blending stocks
governmental agency to cover the money thewith bonds.
bond holder has lent. Bonds are not as exciting asInvestors should have a blend of stocks and
stocks but they do play a critical role in thebonds in their portfolio. Investors preferring more
economy and in keeping your investment portfoliorisk should have higher percentages of stocks in
balanced.their portfolio, but most investors have a mix of
There are two sides of the investing coin --stocks and bonds in their portfolio as bonds cover
stocks and bonds. An investor investing in stocksup the risks.
should also have a thorough knowledge of bonds.There are various options for the investor in
Bonds help keep your portfolio afloat in troubledbonds. He can invest in corporate bonds,
times, since they are the other side of thegovernment bonds or municipal bonds. The most
investing coin. If a person owns stocks, he is asecure bond investments are the US Treasury
part owner of a company, whereas in case he isbonds. Backed by the US government, these
a bond holder he is a creditor of that company.bonds come in several maturities and
If we compare bonds with stocks we come to adenominations.
conclusion that bonds generally have a lower rateBlending stocks and bonds is a necessity for
of return than stocks, but the risk involved inevery investor in order to minimize the risk of
investing in bond is comparatively low, as bondsthe stock market.