This week’s theme is should I invest in bonds now? 

In the last 13 years, I’ve traded upwards of $100 million dollars worth of bonds in my estimation. I’ve bought and sold a lot of bonds, so today I’m sharing with you how I’m investing my client’s bond portfolios today. 

Yesterday, I talked about bond ladders. If you missed that episode, go back and listen to it because I won’t get into the details of why laddering makes sense in today’s episode, but bond ladders are the core of bond investing for my clients. 

Right now, I’m sticking with short and intermediate term bonds, so my ladders for clients usually don’t go past 5 years, and almost none go past 7 years. 

Yields on bonds are still low, so the income on a 5 or 7 year bond ladder isn’t exciting, but it does provide stability and I’ll be able to re-invest client money more frequently as rates seem likely to rise over the next 5 years. I don’t think it’s worth the risk of tying up clients money for 10 years or more just to get a higher yield right now. 

I’ve stopped by individual bonds except for the rare municipal bond purchase. I prefer to build my ladders with corporate bond ETFs. Each ETF is a basket of bonds that all mature in the same year. The yield is comparable to buying a single, individual bond 

I’ve also been adding TIPS to client portfolios. TIPS are U.S. treasury bonds that provide protection against inflation, and if you’ve been listening to the podcast for the last year or so, you know this is a concern of mine.

I’m not a big fan of bond funds with no maturity date, but I’ll buy bond funds if we’re trying to add international diversification to a bond portfolio, and often within 401k accounts, bond funds are the only options there for investing in bonds, so I try to stick with high-quality intermediate term bonds if I’m recommending a bond fund. 

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

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