Understanding Investing

Putting Bonds to Work

The basics of bond investing and the potential benefits.

More from this section

Read Transcript

Narrator: Your money at work. Insights that can help you build a more secure future. Brought to you by PIMCO.

People invest for many reasons. No matter what your personal financial goals may be, to reach them, you need to make sure your money is working hard and working smart. But with today’s complex global markets and so many investment choices available, it can be hard to decide what’s right for you. Understanding a few basic concepts can help you make more informed decisions about investing. This video will help you get started.

Putting Bonds to Work. There are different types of investments, and each has its own purpose and potential benefits. Take bonds, for example. Bonds can play an important role in most investment portfolios, providing the potential for income, diversification, price appreciation, and steadier returns when compared to stocks. Bonds are issued by governments and companies to raise capital. For example, a government may issue bonds to pay for a new school. When you buy a bond, you are lending money to the issuer, who agrees to pay it back at a specific time, and in most cases, to make regular interest payments along the way. The global bond market is huge.

Bonds are issued by governments all around the world and by companies in every industry sector. When you hear bonds, you may think of U.S. Treasury Bonds, but they only account for about 13% of the worldwide total. Today’s global bond market is valued at more than 90 trillion dollars. This diverse market includes bonds that mature over a range of time periods and offer a wide range of interest rates. Bonds with higher risk tend to compensate investors with higher interest rates.

Are bonds right for you? The answer will depend on your investment goals. Some investors choose bonds for their income potential. Many bonds make regular payments, and investors can reinvest that money to help grow their principal or receive it as income. You may also choose bonds if you want the chance for your investment to grow, given a bond’s potential for price appreciation. It is important to remember, however, that just like any investment, there is also the chance that prices will fall.

 Many people also invest in bonds because they offer steadier returns than stocks. This can help reduce big swings in your portfolio and preserve your assets. Consider that in their worst calendar year since 1989, stocks fell 38%, while bonds fell less than 3% in their worst year. Bonds can help diversify your portfolio. Bonds are often considered a good compliment to stocks, because stock and bond prices often move in different directions. Diversification can reduce overall risk and help preserve your assets, though it does not insure against loss.

If investing in bonds seems like a good idea, how do you go about it? You can purchase individual bonds on your own, but for many people, a mutual fund that invests in bonds may make more sense. In a bond fund, a professional portfolio manager will search for opportunities across markets, research, and select bonds on your behalf. Bond funds also give you access to a wider range of bonds, providing an opportunity to increase return potential and diversify risk. A bond fund that invests in a broad selection of bonds can provide a solid foundation for your portfolio. This type of bond fund offers the potential for income, capital appreciation, steadier returns, and diversification.

Helping your money work harder and smarter while you achieve your financial goals.

Filters: Reset All

Filters

Close Filters Dropdown
  • Tags

    Reset

    Close
  • Category

    Reset

    Bond by Bond
    Careers
    Economic and Market Commentary
    Investment Strategies
    PIMCO Foundation
    PIMCO Education
    View from the Investment Committee
    Viewpoints
    Education
    Close
  • Order By

    Reset

    Alphabetical
    Most Recent
    Close
() filters applied

Multimedia Finder

Filter By:
  • Bond by Bond
  • Careers
  • Economic and Market Commentary
  • Investment Strategies
  • PIMCO Education
  • View from the Investment Committee
  • Viewpoints
  • Understanding Investing
  • A
  • B
  • C
  • D
  • F
  • G
  • H
  • I
  • K
  • L
  • M
  • N
  • O
  • P
  • R
  • S
  • T
  • W
Clear
Tina Adatia
Fixed Income Strategist
Olivia A. Albrecht
Head of ESG Business Strategy
Joshua Anderson
Head of Global ABS Portfolio Management
Andrew Balls
CIO Global Fixed Income
Justin Blesy
Asset Allocation Strategist
David L. Braun
Head of US Financial Institutions Portfolio Management
Nathaniel Brown
Director of the PIMCO Foundation
Erin Browne
Portfolio Manager, Multi-Asset Strategies
Libby Cantrill
Head of Public Policy
Stephen Chang
Portfolio Manager, Asia
Pramol Dhawan
Head of Emerging Markets Portfolio Management
Joachim Fels
Global Economic Advisor
David Fisher
Head of Traditional Product Strategies
Adam Gubner
Portfolio Manager, Distressed Debt
Mary Hoppe
Daniel H. Hyman
Head of Agency MBS Portfolio Management
Daniel J. Ivascyn
Group Chief Investment Officer
Mark R. Kiesel
CIO Global Credit
Christine Long
Head of Retirement Marketing
Scott A. Mather
CIO U.S. Core Strategies
Mohit Mittal
Portfolio Manager, Liability Driven Investment and Credit
James Moore
John Murray
Portfolio Manager, Commercial Real Estate
John Nersesian
Head of Advisor Education
Roger Nieves
Senior Advisor
Jason Odom
Strategist, Asset Allocation
Sonali Pier
Portfolio Manager, Multi-Sector Credit
Libby Rodney
Steve A. Rodosky
Portfolio Manager, Real Return and Long Duration
Emmanuel Roman
Chief Executive Officer
Steve Sapra
Client Solutions & Analytics
Jerome M. Schneider
Head of Short-Term Portfolio Management
Marc P. Seidner
CIO Non-traditional Strategies
Greg E. Sharenow
Portfolio Manager, Real Assets
Anmol Sinha
Fixed Income Strategist
Candice Stack
Head of Client Management, Americas
Cathy Stahl
Global Head of Marketing
Christian Stracke
Global Head of Credit Research
John Studzinski
Vice Chairman
Geraldine Sundstrom
Portfolio Manager, Asset Allocation
Christopher Tarui
Richard Thaler
Distinguished Service Professor of Economics and Behavioral Science at the University of Chicago's Booth School of Business
Jessica K. Tom
Senior Credit Analyst
Jerry Tsai
Quantitative Research Analyst
Jamie Weinstein
Portfolio Manager, Head of Corporate Special Situations
Tiffany Wilding
North American Economist
Andrew T. Wittkop
Portfolio Manager, Treasuries, Agencies, Rates
PIMCO
  • Alphabetical
  • Most Recent
Section : Date : Experts :
Reset All
Looking Beyond Low Yields to Understand Bond Performance
PIMCO Education

Effective Discovery and Women Investors(video)

Effective Discovery and Women Investors

John Nersesian, Head of Advisor Education, and Mary Hoppe, SVP Account Manager discuss the importance of client discovery and offer effective tips for working with women investors. 

Interested in additional education for advisors and their investor clients? Visit pimco.com/advisoreducation.

Navigating the Growth Rebound
Economic and Market Commentary

Navigating the Growth Rebound(video)

Navigating the Growth Rebound

The global economy has moved from a late-cycle to an early-cycle environment in less than a year. Positioning portfolios today means taking advantage of new cycle opportunities – in select equities, credit, and emerging markets – while defending against the risks that remain.

Introduction to Bonds

Load more results Load {{cCtrl.fetchResults}} more results

PIMCO

INTERNATIONAL

[change]

Subscribe
Please input a valid email address.