While stocks might bring in the “big bucks”, and produce some serious cash flow, we all know that they are also a more un-reliable source of income. Of course, there is usually nothing to worry about, though, the stock market can take some unexpected turns here and there.
For instance, look at the nineties? The stock boom was heading in one steady direction…. Up. Until it all came crashing down around the turn of the millennium. People who had been building their portfolios completely from stocks got pretty cleaned out. Of course, not everyone lost everything, but there was a lot of trouble, that much is for certain. So, now what? Apparently, the stock market, in its ups and downs, is not the only way to go. Should we forgo this so-conventional method altogether? Of course not. But then again, it is difficult to figure out what we aught to do. Should we start investing in bonds instead of stocks? After all, when the stock market crashes in flames, bonds seem to ride it out pretty well.
Well, it seems that bonds are indeed a good ingredient to the “diverse” portfolio of success. But what should the ratio of bonds to stocks be? Well, many analysts say that if you build your portfolio with the ration of 60/40, stocks to bonds, then your portfolio will not only increase it’s stability, but you won’t really suffer monetarily in the long run.
So next time you are looking to throw some money at your future, try throwing it in the general direction of some secure bonds. Maybe they are kind of old fashioned, but they are stable and they pay. What more could you want? Invest your money into some bonds, or at least adjust your portfolio stock to bond ratio, before something bad happens. That way, you can ride out the storm with relative ease… relieved that you took the time to do it.