Submitted by Brenda P. Wenning on Mon, 01/06/2014 - 9:00am
Here’s a good New Year’s resolution for you: Make bonds a strong part of your investment portfolio. That seems counter-intuitive. It’s a good bet that bonds face a challenging 2014, amid Federal Reserve policy changes and climbing interest rates.
Boring old bonds don’t have the flash that stocks do, they lack the immediate thrill that cash provides because of its liquidity and they’re not as mysterious as alternatives investments like derivatives. Yet if you give them a chance, bonds can play a major role in ensuring that your retirement will be secure.
Submitted by Jared Kizer on Thu, 12/26/2013 - 9:00am
Public pension underfunding at the state and local level is a big concern for municipal bondholders.
Most public pension funds are significantly underfunded when their liabilities are valued using economically reasonable assumptions. In fact, the Pew Trust estimated that total underfunding was roughly $1.4 trillion as of 2010. That means the total value of pension fund assets is roughly $1.4 trillion less than the amount these funds owe to current and future retirees.
Submitted by Nicholas Atkeso... on Wed, 12/18/2013 - 9:00am
Statistically, 2014 looks good. On average since 1926, the Standard & Poor’s 500 total return, which includes dividends, advanced by roughly 11.5% the year after a 20% or greater advance. Absent a steep and unlikely late-December slump, this year is on track to finish well above 20%.
Submitted by Brenda P. Wenning on Tue, 12/17/2013 - 9:00am
If the United States relies on China as its main lender, what happens when China is having difficulties with its debt? Perhaps the world’s second largest economy is not as inexorable as advertised.
We may soon find out how the debt problem will evolve. As the Financial Timesreported, “several banks have had to delay or dramatically reduce Chinese bond issues as the impact of a tight onshore credit market begins to be felt.”
Submitted by Jonathan DeYoe on Fri, 11/22/2013 - 9:00am
If the three-decade-old bond party is over, should you forget about them? Not at all. Here is why bonds deserve to keep a prominent place in your portfolio, regardless of what happens to bond prices.
There is a lot of attention paid to the bond bubble. Maybe there is one, maybe there isn’t. Maybe it pops spectacularly or maybe it doesn’t. We aren’t predicting an outcome here. We won’t know for sure until it pops or slowly deflates over time, as today’s very low rates return to some level of normal.
Submitted by Jared Kizer on Mon, 11/18/2013 - 9:00am
Higher rates are almost certainly good news for the vast majority of fixed-income investors. That flies in the face of what you often hear: Increased rates spell bond price drops.
The usual advice to investors is that they should ignore rate fluctuations and hold onto a bond until maturity, when they get back their full principal. But there’s a little-known corollary: If your investment horizon – how long you want to stay with a security – exceeds the maturity of the bond you hold, you are generally better off if rates go up.
Submitted by Jim Ludwick on Tue, 10/22/2013 - 9:00am
A lot of investors don’t realize that you cannot simply buy, hold and forget about it. Your investment mix should not be static. How much you have in stock, in bonds and in other instruments hinges on many factors. Like your age.
The U.S. stock market high in mid-September prompted a discussion with my business partner, Anna Sergunina. “So what does that mean to us?“ I asked.
“Nothing to me,” replied my younger partner. She was right: Anna has a lot longer to build wealth – and recover from market down drafts – than I do.
Submitted by John Bussel on Wed, 10/16/2013 - 9:00am
Interest rates are up. If they continue to rise, how can you protect your bond portfolio? A good answer is to concentrate your holdings in intermediate maturities, with terms between three and 10 years.
They will suffer less than longer-term bonds and give you flexibility. In fact, the intermediate strategy works in all seasons, even when rates are dropping. Bond prices rise or fall inversely with rates.
Submitted by Manisha Thakor on Mon, 09/30/2013 - 9:00am
One investing style seems all on-the-edge flash. The other is slow and steady. Both can win the stock market race, but history shows one wins a lot more often than the other. Here are ways to decide which is right for you.
Picture two cars driving down a three-lane highway. A red sports car darts between all three lanes trying to find the fastest possible way ahead. A gray sedan in the right lane steadily goes the speed limit. Suddenly a train whistle sounds and in the distance the barrier arm of the railroad crossing comes down.