Worried about your bond portfolio? Keep these 3 things in mind
A friend who’s close to retirement texted that she was concerned about the bond market. She’d been building out that fixed-income allocation over the past several years at the urging of her adviser. Her message made me wonder if some people might have misguided ideas about bonds . Volatility is much lower than for stocks For one thing, notwithstanding the recent headlines, bonds’ volatility is…
Concerned about your bond portfolio? Keep these three things in mind. First, volatility in bonds is typically much lower than for stocks. Even during the recent downturn, bond market index funds only dropped by half a percentage point on a particular day. Secondly, the 2022 bond market losses were the worst in history due to low starting yields at the time.
Finally, when holding bonds, prioritize the return of capital over return on capital. This means ensuring your bonds are in the black for specific spending needs, rather than focusing on stock-like growth potential. Laddered portfolios of Treasury bonds and Treasury Inflation-Protected Securities, or mutual funds with longer durations matching your investment horizon, can provide stability and protection against interest rate fluctuations.
Written by urgent.news from Fast Company's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
