Personally, I stay away from bonds because it is very difficult to time the buy point correctly. It is best to buy when interest rates are high, and about to go down. But if this is the case, it is also time to buy stocks, which generally rally when interest rates are lowered. Generally, the stock trade makes more money in my experience. True, but one way to look at bonds is that you're buying a yield for your portfolio. You have to decide that say a 5% yield is enough for a portion of your portfolio over a 10 year period. At that point, you stop worrying about the price of the bond as it will go up and down. Held to maturity will always get you that yield. Then there are various strategies you can follow in bonds. For instance, you can buy callables and get 4-6% yield for a short period as it likely will get called as rates go down or remain flat. If it doesn't get called, that yield is not bad for a portion of your portfolio.I agree that you can make more money in equities, but at some point you may want to protect your principle and have some certainty in income streams with a bond allocation.
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