Why Invest in Bonds?
Many personal financial advisors recommend that investors maintain a diversified investment portfolio consisting of bonds, shares and cash in varying percentages, depending upon individual circumstances and objectives. Because bonds typically have a predictable stream of payments and repayment of principal, many people invest in them to preserve and increase their capital or to receive dependable interest income.
That is especially true for pension and retirement planning for your future. During the past decade, the traditional fixed-benefit pension and retirement plans have increasingly been replaced or augmented by defined contribution programs which require individuals to take responsibility to plan, save and grow the monies they will need for retirement years. As income levels guaranteed by public pensions decline--and younger workers can expect much lower pensions in the future--many governments are encouraging individuals to make additional retirement income arrangements with private pension savings. Because these private plans offer greater individual freedom in selecting from a range of investment options, investors must be increasingly knowledgeable and self-reliant in saving and growing the funds they will need to support their retirement lifestyles.
The diversity of fixed-income securities presents investors with a wide variety of choices to tailor investments to their individual financial objectives. Whatever your goals, your financial advisor can help explain the numerous investment options available to help you reach them, taking into account your income needs and tolerance for risk.