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Don’t Make Me Say I Told You So 71

bonds may give you slightly lower returns over time than a
portfolio made up entirely of stocks, but typically the investment

portfolio will be less volatile.

Stability – Bonds promise to return your principal if held to
maturity. Even though the price of a bond will go up and down,
sometimes on a daily basis, your principal will be returned if

you hold the bond to maturity.

Consistent Income – Interest payments on bonds are

consistently paid out at regular intervals. The income and

returns on bonds, while maybe not as high as stocks over time,
is much more consistent and predictable.

Tax Savings – The income paid by some bonds may be free
from federal taxes, state taxes, or both. Especially for investors

in high tax brackets, municipal bonds may be an attractive
addition to their portfolio.

Bonds and Risk

Bonds are often called “fixed-income” investments, but

investing in bonds also involves risk. While bonds are usually
considered much safer than stocks, bonds can still lose value

while you own them. Let’s look at some of the risks of owning
bonds in your portfolio:

Chapter 3: You Must Have Growth In Your Portfolio