Having Bonds In Your Portfolio Can Boost Returns
Michelle Ahoy’s heart slumped as she looked at her investments.
In 2018, her portfolio recorded its first calendar-year loss. Measured in Canadian dollars, it dropped 2.57 percent. That doesn’t mean she didn’t invest well. The 40-year old Canadian followed Nobel Prize winning research by investing in a diversified portfolio of low-cost ETFs.
Michelle didn’t like seeing her portfolio value drop. But stocks don’t always rise. On average, stocks climb roughly two out of every three calendar years. However, there’s no discernible pattern. Sometimes, they go on multiple-year upward runs. Other times, stocks languish for years or fall through the floor. That’s why investors should diversify–owning stocks and bonds.
I know what you might be thinking: Bonds are boring. Global interest rates are low. Bonds pay paltry interest.
Michelle Ahoy, picture above with her family
photo courtesy of Michelle Ahoy