INVEST LEARNING TO LOVE BONDS

MANY INVESTORS regard bonds as the frumpier cousins to stocks. Their prices rarely pop or plummet. They usually deliver a lower return, and—aside from a glamorous cameo in the 1980s thriller Die Hard— they are not part of popular culture in the same way as, say, GameStop or Tesla shares. They are, though, a critical part of any well-managed portfolio, and with the stock market looking particularly frothy, this may be more true than ever.

- BY JEFF JOHN ROBERTS

On their face, bonds are simple: An investor loans money to a government or company and gets a guaranteed return with interest over a fixed period of time. But compared with what they know about stocks, many investors are less sure of which bonds to buy, or how to buy or evaluate them. Fortune spoke to three experts who walked us through some of the basics around bonds, but also shared a few lesser-known insights.

‘THE SHOCK ABSORBER’

In 2025, owners of Nvidia shares enjoyed a gain of around 39%—not quite the eye-popping 171% jump the stock notched in 2024, but a very fine return all the same. Owners of the popular 10-year Treasury bill, meanwhile, settled for an annual take of around 4.5%. This illustration underscores the modest returns that come with bond investing, but it doesn’t reflect years like 2008 and 2020, when the stock market declined around 38% and 19% respectively, while bonds reliably delivered positive single-digit returns.

“Bonds are the shock absorber of the portfolio,” says Allan Roth, a former McKinsey consultant and founder of Wealth Logic, whose tagline is “Dare to be dull.” Roth recommends that every investor own bonds and, in particular, Treasury Inflation-Protected Securities, or TIPS, whose payouts fluctuate with the consumer price index to stay ahead of inflation.