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It's essential to evaluate the fixed-income risk within the context of your overall portfolio risk. Typically,volatility in the fixed-income realm is much less than the volatility in other risk assets—namely, equities.You may decide that taking on greater credit risk and less duration risk best suits your objectives.
Having a clear understanding of what type of risk your fixed-income exposure is subject to is important. But whatever your tolerances, fixed-income should continue to play an important role in any well-balanced portfolio.
—By Scott Hanson, Special to CNBC.com. Scott Hanson, a certified financial planner, is a senior partner at Hanson McClain Advisors in Sacramento, Calif.