. There are also index funds that track bond markets, such as US government bonds or corporate bonds.
The common wisdom is to have a greater percentage of your portfolio invested in stocks when you're young, and gradually dial it back as you get older. The idea is that most people can afford to take on more risk when they have several decades of earning potential andMany people think they have a high tolerance for volatility — until stocks plummet and they panic and sell out.
In summary, you might get a slightly lower overall return with bonds in your portfolio, but your risk is also reduced. While it's unlikely anyone would keep their portfolio allocation the same for 94 years, as Vanguard's data measures, this is a good illustration of the broad risk-reward relationship.Bonds are issued by corporations and governments who pay an investor interest on their principal until some point in the future, called the maturity date.