At the moment, the most generous savings accounts are offering interest rates in the neighborhood of 1 percent, while rates on a one-year CD are about 1.2 percent. You’ve also diversified your exposure to interest rates because you are buying bonds at a range of maturities, both shorter, and longer term. Duration is a measurement of a bond fund’s sensitivity to interest rates. Right now, quality strategic bond funds are more concentrated in high-yield and floating-rate bonds.
Key Takeaways:
- Fixed income investments are on the front burner as investors contend with the possibility that the Federal Reserve may raise its key interest rate.
- With a ladder, you can reinvest the proceeds and interest as your bonds reach maturity. Or if you’re retired, you can use that money toward your cash flow.
- Learn about the duration of your portfolio, its underlying contents and its risk profile. Duration is a measurement of a bond fund’s sensitivity to interest rates.
“Fixed income investments are on the front burner as investors contend with the possibility that the Federal Reserve may raise its key interest rate.”
http://www.cnbc.com/2016/11/30/heres-how-bond-investors-can-survive-interest-rate-hikes.html
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