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Home Finance Investing Why Should I Care About Bonds?

Why Should I Care About Bonds?

You want a fat, juicy investment portfolio that oozes money and makes you a zillionaire so that you can outfit your house in Versace, right? Since bonds make less of a return than stocks, why would you ever invest in them?

Well, bonds many not be glamorous or speedy, but they have an important place in your investment portfolio. Buying bonds gives you steady growth and stability, which is especially important if you're also investing in something more volatile like stocks. Without bonds, you're in for a big surprise each time you open your financial app.

Buying bonds along with the rest is a little like inviting both Lady Gaga and your granny to your fabulous party in the Hills. Both can bring the fun, but one brings a healthy dose of much-needed sanity, too.

As you get older, you may even want to shift more of your investments into bonds. That's because you'll want more stability as you get closer to retirement. Your overall investment amount will be larger (we hope), so you'll still be making a decent amount of money, but that money will be more reliable with bonds. If you invest in government or municipal bonds, you might even get a little tax break, which you'll definitely want once you have more cash.

On a bigger stage, bonds and debt are what built this city. (It wasn't rock and roll, no matter what the song says.) The U.S. was built on government and business spending and debt, and Americans trust that other parties will repay (partly because there are some pretty strict laws about repaying debts). Debts may be what built your school, your roads, and even your house; without them, you might be driving along dirt roads in a buggy and still attending a one-room schoolhouse.

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