The theme this week on the Retirement Quick Tips Podcast is mid-year commentary & outlook. 

Today, I’m providing an update on bonds for all you bond investors listening. 

What’s especially difficult about this current downturn is that even many conservative investors who are tilted more toward bonds in their portfolio are also experiencing double digit losses in their portfolios this year. Not only are stocks down 20%, but bonds are down too, and cash is no place to hide because inflation is so high. 

The US Aggregate bond Index is a broad benchmark designed to track the performance of the publicly issued U.S.investment-grade debt. When looking at how bonds are holding up this year, it’s a great place to look. And unfortunately, most investors don’t like what they see: the index is down more than 10% this year. 

It’s no surprise that bonds are struggling this year. The Fed has been forced to get aggressive at raising interest rates due to inflation, and rising interest rates are bad news for bond investors - especially rates that rise quickly and to a large magnitude like we just say last month with the Fed raising rates by .75% at one time. 

An important concept to always remember is that bond prices and interest rates have an inverse relationship. So if interest rates are going down like they have spent most of the last 30 years doing, bond prices will increase. On the flipside, when interest rates go up, like they are right now, bond prices drop, and the more rates rise and the faster they rise, the more bonds get hammered. 

The length of time between now and when your bonds mature has a big influence on how your bond portfolio is holding up at the moment. Bonds that are many years away from their maturity dates - 10 years or more, are getting absolutely hammered this year. On the other hand, bonds that mature later this year have been pretty stable. 

Now if you own a lot of bonds, or even some longer term bonds, that doesn’t mean you should abandon your bond portfolio, but it does present an opportunity to reposition your bond portfolio, which I’ll talk more about on Saturday, when I talk about how we’re investing in this current market environment. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

---------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance