Bonds are loans investors make to issuers– corporations, governments, municipalities or other entities– so that those issuers can fund or expand operations. The issuer gets the cash it needs, while the lender earns interest for the term of the loan.
Bonds can be used as a “core” investment to build the foundation of a balanced portfolio. They offer a wide range of maturities, varying interest payment terms and different credit quality ratings to fit most portfolio needs. Bonds and other fixed-income instruments may also provide a good counterbalance when combined with equities because bonds typically fluctuate less than stocks.
We offer a wide range of fixed-income investment solutions reflecting the varied needs and preferences of our clients. Whether you are looking for income, growth or preservation of your invested principal, bonds may be an appropriate core holding for your portfolio.
Stocks or equities are subject to market risk and it is possible to lose money. Bonds are subject to the risk of rising and declining interest rates. Thus, if interest rates rise, bond prices will fall.
The Bond Pencil is a simple tool. Take out a pencil and hold it in the middle. On the right you have the eraser, that end represents bond prices, on the left you have the pointed end, that represents bond interest rates. If you tilt the pencil you can see the inverse relationship between bond pricing and bond interest rates. If pricing rises, rates fall… and so on…