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What Role Do Bonds Play in a Portfolio?

This series of articles will tackle the basics of bond investing.

Editor's note: This article is part of our "How and Why to Invest in Bonds" series. Click here to read other articles.

One of the great features of holding bonds is diversification--they bring something different from equities to the table in terms of performance. For instance, during a steep stock market decline, government bonds tend to appreciate, serving as a valuable offset for those losses. While a seasoned long-term investor may well ride out the ups and downs in the markets, a well-diversified portfolio can help smooth out bumps on the way to meeting a desired goal.

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