Bond Investing for Newbies

It's not for everyone, but the bond market is becoming more accessible to small investors and can provide ways to diversify your portfolio

Let's not beat around the bush: Bonds aren't the sexiest asset category out there. And that's especially true when the stock market is on a tear. Sexy or not, bonds can be a smart idea for investors. On Nov. 8, Standard & Poor's strategists recommended that investors increase their exposure to bonds to 25% of their portfolio to hedge against potentially lackluster economic growth next year.

By contrast, stocks may be more appropriate for young people who don't plan to dip into their investments for years or decades. The right bond exposure could also depend on factors like family status, income stability, or anything else one considers when investing. But as "something that zigs when the rest of your portfolio zags," Russell Wild, the author, says "bonds really are the best hedge to a primarily stock portfolio."

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