Transcript
… You see this behavior that transpires pretty a little bit when you are in a reduced desire charge ecosystem, folks are seeking to get supplemental produce. But the factor you have to don’t forget is that when you own a stock, no matter if or not it is a serious estate expense have confidence in, a superior-dividend-yielding stock or fund, it is an equity.
So when you have a downturn in the equity current market, you are likely to see the principal value in those people kinds of investments decrease quite significantly. So, yet again, certainly, it is an cash flow-developing asset however, from a diversification standpoint, it will not maintain up the way a bond will maintain up in a downturn in the current market. And you do want that diversification to enable you lower some of the volatility in your overall portfolio.
So it is a thing that traders have to be incredibly cognizant of. When they are using on that supplemental threat, there is a consequence involved with it, and they could see some considerable principal erosion that will come together with that in a downturn.
Critical facts
All investing is subject to threat, such as the feasible decline of the income you make investments.
Diversification does not make certain a profit or guard against a decline.
Investments in bonds are subject to desire charge, credit, and inflation threat.
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“Webcast excerpt: The difference among bonds and dividend-having to pay stocks”,