Whenever I come across personal finance advice, especially those in the US that were written some time ago, the authors always urge more risk-averse investors (like me) and older folks to buy their fair share of bonds. According to these experts, this will enable us to reduce the volatility of our portfolio. Afterall, many studies have shown that bonds have been resilient (or even performing well) when stocks tank. This camp actually believes that proper asset allocation is actually the most important factor behind investment performance. If the market tanks by 30%, some might panic and think that the sky is falling, and then sell the entire portfolio. However, with bonds as a cushion, the overall loss might only be in the region of 10%-15%? And then one would be more inclined to stay invested for the longer haul? I am not about to disagree with this slightly more conservative camp. But then I do realise that local government bonds ......