Nervous about stock market swings? (Who wouldn’t be these days?) Last year, investors learned the value of holding bonds. While stocks slumped, most types of bonds enjoyed healthy returns.
Thus, investors holding balanced portfolios were able to avoid the worst of the tech-stock disaster. A half-and-half position wound up on the plus side.
For example, a portfolio split evenly between the Standard & Poor’s 500 Index and long-term government bonds would have posted positive total returns last year. Here are the numbers for the past three years, according to Ibbotson Associates, Chicago:
- S&P 500 Long-Term Treasuries 50-50 Blend
- 1998 28.6% 13.1% 20.9%
- 1999 21.0 -9.0 6.0
- 2000 -9.1 21.5 6.2
You can see that a balanced portfolio would have produced consistent growth, without the turmoil of holding all stocks or all bonds.
