Bond & Fixed Income Investments

Bonds and Fixed Income investments (collectively referred to as "fixed income") are an important part of an investor's portfolio. It is often recommended that you have a well-diversified investment portfolio so as to make sure you don't have all your investment eggs in one basket. Typically asset classes, such as equities and fixed income, are not directly correlated for performance purposes. In other words, there are times when stocks outperform fixed income and vice versa. For this reason, you may want to make sure your overall asset allocation includes fixed income.

Generally, fixed income investments have less volatility than equities (ie. stocks). Accordingly, fixed income may be included in a portfolio to reduce the overall risk of the portfolio. Fixed income investments can provide excellent downside protection for your investment accounts, especially in bear stock markets. When the stock market is falling, it is usually your allocation to fixed income that holds up your portfolio.

Fixed income investments are also purchased to provide income (ie. bond interest) to investors. If you are retired and looking for income to cover your monthly expenses, fixed income investments can provide that income. These investments can come in many different forms, such as corporate bonds, municipal bonds, government bonds, foreign debt, etc.). Regardless of the form, many investors create a laddered bond portfolio; where the individual bonds mature in different years and pay interest in different months. This way you can collect the bond interest in different months and cover your expenses.

A crucial aspect of financial planning is asset allocation. Bonds and fixed income investments play a part in that allocation. Additionally, this asset class can be a great source of income for an investor that needs income to cover expenses. Our team of qualified and highly skilled New York financial planners can help you implement a well-constructed fixed income portfolio that is very specific to your cash flow needs, family circumstances, and financial and tax situations.

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