Brussels sprouts are good for us but we need more than just a bunch of tiny cabbages, we need a balanced diet. In the same vein, index fund might be good for us, too but we need a balanced portfolio as well.
The reason that we should balanced our portfolio that because bonds become parachute when stock markets fall.
This chapter Mr. Hallam introduces and talks more about "Bonds"
So what is Bonds?
According to Mr. Hallam. Bond is a secret agent with a license to kill. He would never dies, he sleeps with multiple women for like 15 years or so. He can transplant to another completely different guy.
Financial bonds are just as riveting.
Bonds don't make as much money as stock in a long term. Bonds are less volatile, bonds can save your account from falling to the bottom.
Bonds are safe to invest. As there are bonds that you can buy are first-world government bonds from high income industrial. There also are the safe bonds but slightly riskier as people called "blue- chip bonds" such as CoCa-Cola, Walmart, and so forth. There also are riskier bonds but you have to pay a higher interest, higher chance that you might forfeit on the loan.
If you invest money in index bonds, it's better to invest it in a short term. Because of chances of inflation. If it happens, you're losing money. Bond index funds are always better than actively managed bonds funds. Whether you're buying stock indexes or bonds indexes, actively management generally slashed your return because of the hidden fees.
In this chapter, Mr. Hallam how many percentage of bonds that you should have in your portfolio. Experts suggest that it should be your age minus 10. If you want it to be riskier, your age minus 20.
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