Simple Basics: How Bonds Benefits You When Growing Wealth

One reliable way of growing your wealth is investing in the stock market. When you carefully select different types of securities in your investment portfolio that are actively managed to reduce risk, you have the ability to grow and sustain your wealth.

There are times when you want to be invested in the market and other times when you will want to opt for safety and have your money in cash or a money market instrument to avoid taking investment risk. Having your assets in the money market is for liquidity purposes so you have access at a moment’s notice and be ready for the next opportunity that comes up.  There are strategies you can do that will capitalize on the up and down movement in the stock market that have less risk.

One conservative investment approach to add diversification to your investment and more safety in your investment portfolio is using bonds.  One choice, although there is no guarantee, you can invest in a bond mutual fund where a portfolio manager makes the decisions for you.  A portfolio manager chooses which bonds to buy for you. There are mutual funds that invest in low-risk bonds which generally move slow and steady, different than having all of your assets in one stock that could move quickly up and by down 20%.

Simple basics why invest some of your assets in bonds:

• Bonds are usually safer and less volatile investments than stocks. However, be aware that different types of bonds have more risk than others.
• Bonds give you a fixed income stream, have a limited potential return that changes depending on the current interest rate environment.
• Individual bonds return your principal at the maturity date unless the underlying company goes bankrupt.
• Investing in a conservative bond mutual fund is likely to pay yields higher than what checking or savings accounts pay in a low-interest rate environment giving to an opportunity to grow your wealth consistently.

Even though bonds are a conservative investment, it’s important to have an exit strategy because bonds do have risk and big losses may occur. Therefore, have a plan to review your bond portfolio to see if changes are necessary, when or if interest rates rise which would cause your existing bonds to lose value.   Stability, flexibility and protecting your capital are keys to growing your wealth. Taking responsibility for your finances by being proactive, will give you the success you want to grow and sustain your wealth instead of having a roller coaster ride with your money.

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Bonnie S. Gortler

Bonnie Gortler, Consultant, Coach, and Author specializing in Wealth and Well-Being, is a successful stock market expert who has been instrumental in managing multi-million-dollar client portfolios within a top-rated investment firm during her over 35-year corporate career. As the author of “Journey to Wealth,” Bonnie has made it her mission to share the importance of risk management and how to enjoy real financial well-being by applying the technical and mental sides of investing. Bonnie has an M.B.A. and is a certified life coach. It is through her love of coaching, consulting, blogging, and social media that she creates change in the lives of many and inspires people from around the world. Bonnie is fully committed to your personal growth and development as she shares her winning spirit and powerful techniques with you. Visit BonnieGortler.com to gain tips and insights about investing, personal development, and inspiration through her articles on Wealth and Well-Being.
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