Bond Basics: Investing

Bonds help add diversity to your portfolio and control risk. But they can be complicated.

Gold egg sitting in nest of dollars with the word BONDS on a data chart in the background
(Image credit: Getty)

Bonds sound boring, but they're not.  They are more than just a nice safe haven for rich and retired folks who never want to lose money. They have an important role to play in your investment plan for many reasons.

First, bonds aren't stocks. Well-selected stocks tend to rise over the long run. But in the short run they can go drop, sometimes through no fault of their own. The same factors that depress stock prices, such as a recession or sluggish business conditions, tend to boost bond prices. Bonds and interest rates move in opposite directions. So, bonds can help to take the bite out of falling interest rates. This makes them ideal for diversifying and managing the risk of your investment risks.

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Donna LeValley
Personal Finance Writer

Donna joined Kiplinger as a personal finance writer in 2023. She spent more than a decade as the contributing editor of J.K.Lasser's Your Income Tax Guide and edited state specific legal treatises at ALM Media. She has shared her expertise as a guest on Bloomberg, CNN, Fox, NPR, CNBC and many other media outlets around the nation.