Bonds are back–should I own more of them?

1058. With 10-year U.S. Treasury yields above 5.3%, many investors are asking if they should ditch stocks and play it safe with fixed income. Host Laura Adams answers a listener’s question about investing when retirement is ten years away. You’ll learn the basics of bonds and how to use a three-bucket strategy to lower risk without giving up long-term growth. Key Takeaways A bond is a loan an investor gives an entity (like the federal government, a local municipality, or a corporation) in exchange for interest payments over a period. 10-year U.S. Treasury bond yields have climbed above 5.3%, their highest rate in decades, providing an inflation-adjusted return of about 2%. The longer the maturity of a bond, the higher its interest rate will be. You can buy individual bonds or bond funds, which are diversified and an easy way to buy a preset portfolio of bonds from brokerages and investment platforms. Owning individual bonds to maturity eliminates price fluctuation risk, where a bond’s price shifts based on interest rates. Retirees can benefit from structuring their portfolio into three buckets: cash, bonds, and stocks, to protect against potential market losses. Discover more from Money Girl! Facebook Newsletter Transcripts available at QuickandDirtyTips.com. Email: [email protected] or leave a voicemail: (302) 364-0308. Hosted on Acast. See acast.com/privacy for more information.