Webcast excerpt: The difference between bonds and dividend-paying stocks

Transcript

… You see this behavior that occurs pretty a little bit when you’re in a minimal fascination charge atmosphere, people are striving to get supplemental produce. But the matter you have to keep in mind is that when you individual a stock, regardless of whether or not it is a true estate investment have faith in, a large-dividend-yielding stock or fund, it is an equity.

So when you have a downturn in the equity market place, you’re going to see the principal value in those styles of investments decline rather radically. So, yet again, yes, it is an revenue-making asset nonetheless, from a diversification standpoint, it will not maintain up the way a bond will maintain up in a downturn in the market place. And you do want that diversification to aid you lessen some of the volatility in your in general portfolio.

So it is one thing that traders have to be incredibly cognizant of. When they’re using on that supplemental threat, there is a consequence affiliated with it, and they could see some important principal erosion that will come alongside with that in a downturn.

Crucial information and facts

All investing is issue to threat, which includes the possible decline of the funds you make investments.

Diversification does not ensure a revenue or safeguard in opposition to a decline.

Investments in bonds are issue to fascination charge, credit, and inflation threat. 

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