Why Bonds Shouldn’t Be the Only Asset in Your Portfolio

When you are new to the world of investing, you may start with a single type of investment to get your portfolio started. In many cases, this tends to be bonds because they are a fairly dependable investment that can yield consistent results. However, you don’t want to continue building your portfolio with only bonds. Having a mix of different asset classes will help you to have a healthy portfolio.

Diversification

One of the most important parts of your portfolio is that you want it to be diverse so you have a little protection from risk and more potential for gain. Bonds can be a good source of positive investment but they are unlikely to yield a huge amount of profit. When you add a variety of other investment types you can help to beef up your portfolio. You can start to think about diversifying in ways that will make investing more fun and more successful for you.

Inflation

You also need to think about how inflation can impact your investments. With bonds, you aren’t really going to see any benefits from the inflation that the world experiences. But other kinds of investment assets can actually gain value as investment goes up. For example, gold tends to gain value during times of inflation. When you keep inflation in mind you can start adding additional assets that can take advantage of that aspect of investment.

Flexibility

When you have only invested in bonds, it can be difficult for you to make sure you have the flexibility to manage your investments the way you wish. When you are working with any one single type of investment you are always going to run into issues with flexibility. And when you want to make changes to your style of investing, it is hard to do with only a single asset class. When instead you make sure you have various types of investments, you can make sure that you are constantly moving forward and have the ability to make changes when you need or want to.

It is important that you take time to research all of your investment options so you can make a solid portfolio for yourself. That gives you an option to make sure that you are supported by your investments and not just the other way around. When you diversify your portfolio and move away from only having bonds you can get more from your investments.

Check out this article on what you can do with the equity built up in your home!