With bonds, the word value is used in two different but related ways:
To describe the advantages bonds add to a diversified portfolio
To assess the comparative worth of individual bonds
As a general rule, bonds can help you weather downturns in the stock market, not only because bonds tend to fluctuate less in price than stocks, but also because they have the potential to provide regular income and strong
total returns
in periods when stocks are struggling.
Once you're convinced that adding bonds to your portfolio makes sense, the next task is evaluating the potential risks and rewards that individual bonds pose to find
those that, either individually or in combination, add the greatest value. The places to start are with the bond's
interest rate,
its term, and its rating.
Alexandra Lebenthal, President and Chief
Executive Officer of
Alexandra &
James, Inc.
Alexandra Lebenthal, President and Chief