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

Truman Slate

Transcript

… You see this conduct that occurs fairly a little bit when you are in a low curiosity price atmosphere, individuals are making an attempt to get additional yield. But the matter you have to recall is that when you individual a inventory, irrespective of whether or not it is a true estate expenditure belief, a higher-dividend-yielding inventory or fund, it is an fairness.

So when you have a downturn in the fairness industry, you are going to see the principal worth in all those sorts of investments decline quite significantly. So, once more, of course, it is an income-making asset however, from a diversification standpoint, it will not maintain up the way a bond will maintain up in a downturn in the industry. And you do want that diversification to assist you cut down some of the volatility in your all round portfolio.

So it is one thing that buyers have to be pretty cognizant of. When they are taking on that additional threat, there is a consequence affiliated with it, and they could see some substantial principal erosion that arrives along with that in a downturn.

Significant information

All investing is subject to threat, including the possible decline of the funds you invest.

Diversification does not ensure a financial gain or defend towards a decline.

Investments in bonds are subject to curiosity price, credit, and inflation threat. 

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