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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Sunday, May 21, 2006

Using Bonds to Diversify

We have spoke many times of the importance of diversification when investing. Adding bonds to your portfolio can help lower risk without sacrificing return. For example, if you had a portfolio of 50% stocks and 50% cash. By adding bonds to this particular portfolio so you have 35% stocks, 16% cash and 49% bonds over a long time horizon will give you a better risk and return trade off because you will have the same performance with a lower level of risk.


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