Many investors don’t understand the intricacies of bonds and this article covers how bonds work. Bonds are a key part of portfolios (although not as large a part as in days past) but need to be understood – especially in this low interest rate environment.
I’ve experienced three major market declines as an advisor (1999, 2003 and 2008) and countless minor dips that last weeks to months. Although my clients remained invested, many claimed they “lost” money through this process. I maintain the only money they lost was the money they didn’t invest. This article may help you with this “mental accounting” of loss with a story about an Oklahoma born high school graduate that “lost” 12 Billion dollars – that’s US $!