Why Buy Fixed Income?

Sometimes it seems as though market products are pitted against each other. The consideration is based on the latest news or potential forecast that improves an investor's at-the-moment potential. The reality is that long-term strategic planning utilizes the characteristics of many market products that work with each other supporting an overall strategy. Long-term considerations apply to growth assets (like stocks) just as temporary advantages likewise may affect fixed income. Each asset plays a role and although the market is presenting growth-like returns in individual bonds, the long-term protective features govern their portfolio purpose.

I’ve been in this business a long time and still can’t help but get caught up in the excitement, risk, potential, and drama of swinging for the fence. If we consume the right information and time things just right and invest in the perfect company and interest rates swing in our favor and availability abounds… we might just hit that perfect investment “home run”. This process makes things more exciting and perhaps we even believe we can outsmart the entire market and outperform everyone else. I’ve played the lotto with the same enthusiasm and hope but realize that while exciting, it is not a reliable long-term strategy for building an investment portfolio.

No matter what the debate, it will not appeal to 100% of investors. There will always be investors adamant about beating the odds or others so conservative that even the slightest risk is too much. The practical account is to examine what works long term for most investors and that likely encapsulates both growth assets and assets designed to protect capital.

Mdy S&P