How Bonds Can Fit Into Your Portfolio Bonds can be a vital part of a well-diversified portfolio. If held to maturity, bonds offer the potential for long-term safety and income even during times of stock market volatility.
Bonds offer the potential to generate a steady rate of return.
Both government entities and corporations issue bonds to generate capital for a wide range of financing needs. Corporate bonds usually finance operating expenses, corporate takeovers or special projects. The U.S. Treasury issues bonds to pay off the national debt or for special spending projects. States, and municipalities issue bonds for a variety of reasons, such as building new sports facilities, upgrading highways, or building or renovating schools. The different bond ratings indicate varying degrees of risk.