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Gordon Pape’s mailbag: Why hold bonds when rates are rising and more Add to ...

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It’s been several weeks since I looked at the Q&A inbox and a lot of mail has piled up. So let’s get right to it.

Why keep bonds?

Q – Why keep bonds in a portfolio when we anticipate interest rates to go up in 2017? – Peter M.

A – Reduced risk is the primary reason. Fixed-income securities like bonds provide a safety net in the event of a stock market crash. A portfolio that is 100 per cent exposed to equities is going to experience heavy losses if the market crumbles. Quality bonds rarely produce a negative total return in any given year and when it happens the losses are usually small.

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