15. Investing in bonds - Reasons to invest in bonds Why Do Investors Include Bonds in their Portfolios? You should consider investing in bonds if you desire from a portion of your investments. Although bonds typically offer returns to investors than stocks, there are good reasons to consider including bonds in your portfolio: Including bonds in your portfolio can your portfolio's level of risk due to market risk. Bonds allow you to obtain income that is Many bonds have the potential to increase in value over time. Bonds can allow you to tailor your investment portfolio to match your investment time horizon. Because bonds are generally risky than stocks, bonds become more attractive as your investment time horizon gets . This is because if you have a shorter time horizon (say, less than five years), you are more likely to be concerned primarily with . In general, as you get closer to needing to use the money from your investments (for example, as you get closer to retirement), a percentage of your portfolio should be dedicated to bonds. The following table contains model investment portfolios for various risk-tolerance levels and time horizons. You can use this table to estimate how much of your investment portfolio should be dedicated to bonds, equities (stocks), and cash (or cash-equivalent) investments: Model Portfolios and Time Horizons Risk Tolerance/Investment Philosophy 0-5 Years 6-10 Years 11+ Years 100% equities 10% cash 30% bonds 60% equities 20% bonds 80% equities High Risk/Aggressive 20% cash 20% bonds Moderate Risk/Moderate 40% bonds 10% cash 30% bonds 60% equities 80% equities 40% equities Low Risk/Conservative 35% cash 20% cash 40% bonds 40% bonds 25% equities 40% equities 10% cash 30% bonds 60% equities Suppose that you are an investor with a moderate investment philosophy (that is, you have a moderate risk tolerance level). According to the table of model portfolios, % of your portfolio should consist of bonds if you are investing for a time horizon of 6 to 10 years. 15. Investing in bonds - Reasons to invest in bonds Why Do Investors Include Bonds in their Portfolios? You should consider investing in bonds if you desire from a portion of your investments. Although bonds typically offer returns to investors than stocks, there are good reasons to consider including bonds in your portfolio: Including bonds in your portfolio can your portfolio's level of risk due to market risk. Bonds allow you to obtain income that is Many bonds have the potential to increase in value over time. Bonds can allow you to tailor your investment portfolio to match your investment time horizon. Because bonds are generally risky than stocks, bonds become more attractive as your investment time horizon gets . This is because if you have a shorter time horizon (say, less than five years), you are more likely to be concerned primarily with . In general, as you get closer to needing to use the money from your investments (for example, as you get closer to retirement), a percentage of your portfolio should be dedicated to bonds. The following table contains model investment portfolios for various risk-tolerance levels and time horizons. You can use this table to estimate how much of your investment portfolio should be dedicated to bonds, equities (stocks), and cash (or cash-equivalent) investments: Model Portfolios and Time Horizons Risk Tolerance/Investment Philosophy 0-5 Years 6-10 Years 11+ Years 100% equities 10% cash 30% bonds 60% equities 20% bonds 80% equities High Risk/Aggressive 20% cash 20% bonds Moderate Risk/Moderate 40% bonds 10% cash 30% bonds 60% equities 80% equities 40% equities Low Risk/Conservative 35% cash 20% cash 40% bonds 40% bonds 25% equities 40% equities 10% cash 30% bonds 60% equities Suppose that you are an investor with a moderate investment philosophy (that is, you have a moderate risk tolerance level). According to the table of model portfolios, % of your portfolio should consist of bonds if you are investing for a time horizon of 6 to 10 years