While stocks tend to grab headlines, bonds are a crucial component of a well-rounded portfolio—especially for those seeking income and lower volatility. In 2025, with fluctuating interest rates and uncertain markets, understanding bonds is more important than ever.

What is a bond?
A bond is essentially a loan from you to a government, municipality, or corporation. In return, you receive regular interest payments (coupon) and the return of your initial investment at maturity.

Types of bonds:

• Government bonds: Issued by federal or provincial governments (e.g., Canada Savings Bonds, U.S. Treasuries)
• Corporate bonds: Offered by companies looking to raise capital
• Municipal bonds: Issued by cities or local authorities, often with tax advantages

Why include bonds?

• Stability: Bonds are typically less volatile than stocks.
• Income: They provide predictable interest payments.
• Diversification: Bonds often move differently than stocks, smoothing portfolio performance.

How to invest in bonds:

• Bond ETFs or mutual funds: Great for accessibility and diversification.
• Individual bonds: Better for customization, but require more knowledge.
• Robo-advisors: Many platforms automatically allocate bonds based on your risk profile.

Watch for interest rate risk:
When rates rise, bond prices fall. In 2025, laddering strategies or investing in short-duration bonds can help mitigate this.

A healthy portfolio often contains both growth and income assets. Bonds offer a safety net, making them vital for retirees, conservative investors, or anyone who wants to ride out market turbulence.