A Day in the Life of Your Portfolio: BONDS


Bonds and stocks. Stocks and bonds. Either way you look at it, a solid investment strategy includes allocations of both in your portfolio. Bonds and stocks are both securities, but the role of investors differs.

Whereas stockholders have an equity stake in a company (that is, they are owners), bondholders have a creditor stake in the company (that is, they are lenders). As a lender, bondholders are paid interest throughout the duration of the defined term (or maturity, after which the bond is redeemed) and have priority over stockholders if things go bad.

Bonds are particularly attractive to clients who are tapping into their investments for income and have less tolerance for risk in their portfolio. The biggest issuers of bonds are governments and corporations such as banks, consumer goods, and health care companies. Bonds normally provide investors a positive rate of return, especially when interest rates and inflation are low. When inflation goes up, so do rates, and bond returns decline. This phenomenon, which has only occurred 12 times in 120 quarters, happened in the second and third quarters of 2018.

Guided by its fundamental, value-driven investment approach, River Wealth Advisors addressed these conditions by evaluating portfolio structure, alternative securities and spreading allocations across industries and issuers to prevent overexposure to risk.

River Wealth Advisors’ portfolio managers monitor our clients’ bond holdings and evaluate our brokers’ offerings daily to determine what will fit your needs. We negotiate the purchase, primarily buying bonds to manage until maturity, and allocate the bonds to the respective client accounts. Importantly, we evaluate existing holdings and take action when needed to address unanticipated developments. You can view recent allocations to your account on the River Wealth Advisors app or on your portal.

Bonds continue to be a prudent component of a long-term investment strategy, and we assess opportunities every day to drive greater value for your portfolio.