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.
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Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.
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