Why should you include debt instruments in your portfolios? Here are 5 key reasons
financial landscape can be akin to a thrilling yet complex journey. Amid the buzz around stocks and real estate, there lies a less talked about, yet crucial, investment avenue: debt instruments. For the discerning Indian investor, understanding and leveraging these instruments can be a game-changer.
Let's delve into why incorporating debt instruments like bonds into your investment strategy is not just wise, but essential. In the fluctuating world of finance, stability is a prized asset. Debt instruments, particularly bonds, offer this by providing fixed returns at regular intervals.
This stability is not just about peace of mind; it's about having a reliable source of income, especially useful in uncertain times. For instance, in the wake of market disruptions like the COVID-19 pandemic, Indian government bonds served as a financial anchor for many portfolios, offering steady interest payments when other investment avenues were underperforming. Balancing risk is at the heart of savvy investing.
The 60/40 rule, allocating 60% to stocks and 40% to bonds, is a strategy many investors swear by. But why this ratio? It's about having a foot in two boats – growth and stability. When the stock market is volatile, bonds often remain more stable.
This balance is vital in the Indian context, where market swings can be pronounced due to factors like policy changes, global market influences, and economic reforms. In the realm of investing, safety is as important as growth. This is where debt instruments shine.
Read more on livemint.com
