EC Should Investors Be Cautious On Short Term Bonds?

Many investors have flocked to high yield and investment grade corporate bonds and even emerging market bonds to pick up that extra yield. While I believe anything in moderation is fine, I personally like to take my risks with stocks and leave the bond portion of portfolios to high quality treasuries bonds of different durations.

The other equally important aspect is cash flow needs. So like stocks, longer duration bonds shouldn’t be invested in with money that may be needed in the near future. For shorter term cash needs, there is a natural gravitation to these short term bond funds. However I question the relative risk to reward of these funds as opposed to a short term CD or even a money market fund.

The thesis here is not to persuade investors to make tactical changes to their portfolios. But rather to challenge the perception of investors belief that they can perfectly time, and thus avoid loss, these macro interest rates moves. Good luck with that!

1 2 3
View single page >> |

Disclosure: Nothing on this article should be misconstrued as investment advice. Trading and investing is very risky, please consult your ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Alexa Graham 4 years ago Member's comment

You've proven your case well.

Michael Gouvalaris 4 years ago Author's comment

Thanks for reading Alexa, I appreciate that.