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Bonds and stocks tend to have an inverse correlation. And, yep, bonds are up while stocks and real estate are down. That’s why financial advisors tell you to k
by jdlshore 2y ago
Bonds and stocks tend to have an inverse correlation. And, yep, bonds are up while stocks and real estate are down.
That’s why financial advisors tell you to keep a mix of stocks and bonds, trending towards a greater percentage of bonds depending on your risk tolerance and as you get older. (Because bonds have lower returns than stocks, historically, but are also less volatile.)
- LikeBeans 2y agoOften yes but sometimes they both go down. However bonds don't decline as fast. The actual strategy I follow is stock/bond/short-term. The short term is like a buffer currently invested in short term treasury fund. Think of it like a game. If stocks are low then sell bonds and when that is also low then use the short term investment to live on to wait out the market recovery. Also if you are retired like me you would tighten expenses when drawing from the short term during a downturn.
- jjav 2y ago> Bonds and stocks tend to have an inverse correlation. Careful with this, it's not always true and which kind and duration of bonds is important.