This week, I’m talking about 5 types of bonds to own now. 

Today, I’m talking about short term bonds and why I like them even when the yields on bonds - especially shorter term bonds are so low. And let me just clarify that by short-term I mean 1-5 years. 

The primary reason I like short-term bonds right now, even if you’re earning less than 1% yield on these bonds is because they provide stability, albeit with less income, and they’re not going to get clobbered when interest rates start heading higher again. 

Longer-term bonds - bonds that don’t mature for 10, 20, or 30 years may be more appealing right now, because you can get a better yield, but longer-dated bonds get hit much harder when rates turn around and head higher. 

So I think there needs to be other ways to find income and you’ll need to find income in other places. First of all, you can find a lot of high quality stocks right now that are paying dividends in the 3% range. Investing in more dividend paying stocks will help bridge that gap if you’re already retired and you need portfolio income. 

But if you’re nearing retirement, which most of you listening are - invest in the bonds for the stability they provide - they’re going to earn more than cash, but stay disciplined and don’t get desperate for yield by looking for it in all the wrong places - high yield, high risk, or longer-term bonds.

Not sure how much you should have in bonds at your age? Email me and I will send you our age-based asset allocation cheat sheet. It’s a guide to what your stock and bond mix should be for your age, and it’s the foundation that we use when building portfolios for all of our clients. 

Just shoot me an email - [email protected]. That’s [email protected] and I’ll send you your free age-based asset allocation cheat sheet, to help you determine the right mix of bonds for your portfolio. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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