Bond or equity?

The current pandemic resulted more local corporate bonds to be issued to fund private projects. You shall see more bonds being issued in 2021. Is it a wise choice to invest in bond?

As a moderately aggressive investor, I personally prefer equities more than bonds. Bonds have the benefit to generate consistent income stream and more stable return over equities. However, the return is quite low compared to equities.

Source: https://www.investopedia.com

If you look at the above chart, the biggest 500 companies in US actually delivered average return more than throughout the years (with many years reaching above 10% and some years more than 20% – 30%). At such low rate environment and considering the impact of pandemic to the economy, many value stocks and equities are still trading at a discount. This will be the time for us to be more aggressively investing, fishing and hunting for more equities, especially for those who have not started investing, than to be too conservative. How to hunt for good equities? I have discussed this topic in my blog, read here. Sectors and industries to be focused on are discussed here.

One portfolio shall contain bonds because bonds serve as cushion and protection for high volatility market during this unprecedented period. I have also discussed the asset allocation of bond / equity in this blog. In conclusion, if you are not retiring yet and require growth than stability, equities shall be the preferred option.

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