Skip to Content
The Short Answer

Do Young Investors Need a Bond Allocation?

Although stocks should play the leading role, some allocation to bonds can be beneficial.

Mentioned: , , , ,

Q: If you have a very long time horizon, and won't need the money for 40 years, is there any point in diversifying into bonds or any other asset class that traditionally earns far less than equities? Is diversifying among different types of equities enough?

A: If you don't need the money for several decades, you are correct that you don't need to have a large allocation to fixed income. Because stocks, despite their volatility, are likely to outperform bonds over extended periods, the longer one's time horizon, the greater one's allocation to stocks should be.

Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.