What role do bonds actually play in a portfolio if their returns are lower than stocks?

Bonds are not there to maximize returns; they are there to cushion the ride and provide dry powder. Their main jobs are dampening volatility, preserving capital you may need soon, and giving you something stable to sell or rebalance from when stocks fall. During sharp equity drawdowns, high-quality bonds often hold value or rise, which lets you rebalance into cheap stocks instead of selling them low.

Think of the stock side as your growth engine and the bond side as the shock absorber. Younger investors with decades ahead can hold little in bonds; those near or in retirement lean on them to fund spending without being forced to sell stocks in a downturn. To see how a stock/bond mix behaves over time, try the Model Portfolios tool at wealthserene.com/tools/model-portfolios.