Should I own bonds when I'm young?

With a long horizon, many investors hold few or no bonds for maximum growth, but some bonds reduce volatility and the temptation to panic-sell. It depends on your risk tolerance, not just your age.

What percentage should be in bonds?

It depends on your horizon and nerves. Common balanced mixes range from 80/20 to 40/60 stocks/bonds. Test a few splits to find one you could hold through a downturn.

High-quality government bonds are far steadier than stocks, but not risk-free: they can fall when interest rates rise (as in 2022). They're about stability and income, not zero risk.

Stocks vs Bonds: How They Differ and How to Mix Them

6 min read · Updated 2026-06-15

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Stocks and bonds are the two building blocks of almost every portfolio, and they play opposite roles: stocks drive growth, bonds provide stability. Understanding the trade-off between them is the single most important decision most investors make.

Here's how they actually differ, why most portfolios hold both, and how to choose, and test, the split that fits you.

Backtest a stock/bond mix →

What each one actually is

A stock is part-ownership of a company: you share in its growth, which historically has produced the highest long-run returns, but with big swings, including the occasional 30 to 50% drop. A bond is a loan to a government or company: it pays interest and returns your principal at maturity, so it's generally steadier and lower-returning. Ownership vs lending; growth vs income.

The risk/return trade-off

More stocks means higher expected return and a rougher ride; more bonds means a smoother ride and lower expected return. There's no free lunch: the question isn't “which is better,” it's “how much volatility can I accept in exchange for growth?”

How different stock/bond splits tend to behave
Mix (stocks/bonds)	The ride	Worst-case flavor
100/0	Highest growth, biggest swings	Historically ~50%+ drawdowns
80/20	Still growth-driven	Deep, but slightly cushioned
60/40	The classic balance	Roughly half the all-stock pain, most cycles
40/60	Stability first	Modest drawdowns, slower growth
20/80	Capital preservation	Inflation becomes the bigger risk

Directional characterizations, not guarantees: 2022 hit stocks and bonds together. Backtest your own split.

Why hold both

In most downturns, high-quality bonds hold up or rise while stocks fall, so a blend falls less and recovers faster than all-stock: the “ballast” effect that makes a portfolio easier to hold. (2022 was a notable exception when both fell together; see our 60/40 guide for why.) The mix you can actually stick with beats a higher-return mix you abandon in a crash.

How to decide your split

Two factors dominate: your time horizon (the longer until you need the money, the more stocks you can hold) and your tolerance for seeing the balance drop. Old rules of thumb like “hold your age in bonds” are starting points, not answers: the right split is personal.

Test your mix before you commit

Backtest a few stock/bond splits (say 80/20, 60/40, 40/60) over a period that includes a real crash, and compare the growth against the worst drawdown. Seeing the trade-off in numbers makes the decision far easier than guessing.

Try it yourself

Backtest PortfolioCompare stock/bond splits on real history.Open tool →Asset Class BacktestTest allocations by asset class, including bonds.Open tool →Efficient FrontierFind the best stock/bond mix for your risk level.Open tool →

FAQ

Should I own bonds when I'm young?: With a long horizon, many investors hold few or no bonds for maximum growth, but some bonds reduce volatility and the temptation to panic-sell. It depends on your risk tolerance, not just your age.
What percentage should be in bonds?: It depends on your horizon and nerves. Common balanced mixes range from 80/20 to 40/60 stocks/bonds. Test a few splits to find one you could hold through a downturn.
Are bonds safe?: High-quality government bonds are far steadier than stocks, but not risk-free: they can fall when interest rates rise (as in 2022). They're about stability and income, not zero risk.

Key terms in this guide

Plain-English definitions in the Learning Hub.

Volatility (annualized standard deviation) →Maximum drawdown →Correlation →Duration →

Already computed · real data

VTI vs BND on real data

Side by side, same dates

US stocks (VTI) grew from $10,000 to $72,870 between May 2007 and Oct 2026 (10.7% a year). Its worst fall was -51%, from Oct 2007 to Feb 2009, and it took 53 months (about 4 years) to get back to that high. US bonds (BND) grew from $10,000 to $14,881 between May 2007 and Oct 2026 (2.1% a year). Its worst fall was -17%, from Jul 2020 to Oct 2022, and it had not yet regained that high by Oct 2026.

Real 2007-05 to 2026-10 data, dividends reinvested, rebalanced yearly. Past performance doesn't predict future results.

Growth of $10,000, May 2007 to Oct 2026

US stocks (VTI)US bonds (BND)

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Keep watching one of them, free: VTI or BND. A free account saves it as your plan and checks it for you every month.

For educational and informational purposes only, not financial, investment, tax, or legal advice. Backtests are hypothetical; past performance does not guarantee future results.