Bond Indexing

Bond Indexing - Bond Indexing involves designing a portfolio consisting of fixed securities, fixed for income, so that a particular bond index benchmark is followed by the securities. Because bonds are considered a lower risk than stocks, it is wise to have many of these within your portfolio so that your portfolio is diversified with less risky investments. A benchmark is a standard that is used to compare; therefore a good example might be the Nasdaq as it is a good benchmark to the performance of how technology stocks compare. This comparison can then be used to decide which bonds are safe investments with good returns.