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Adding Bonds to Your Portfolio

Wednesday, April 21, 2010 - 7:19 AM
This commentary from Kiplinger makes the case that investors need to add bonds to their portfolios. The article also provides some useful information on how to invest in bonds and bond funds.
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Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,743
1. Wednesday, April 21, 2010 - 9:20 AM
Now is not the time to add bonds or bond funds to one's portfolio. The risk of rising interest rates coming down the road will reduce the value of the bonds. At historic low rates, unless one holds individual bonds to maturity, the yield from the bonds will be more than off-set by the declining price of those bond holdings, especially in a bond fund. In regards to PIMCO, they are reducing their holdings of U.S. Treasury debt in a big way in anticipation of rising rates. That should tell you something.
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AnonymousAnonymous2,281 posts since
May 9, 2010
Rep Points: 3,788
2. Wednesday, April 21, 2010 - 12:35 PM
I agree.  You're better off just keeping the money in a savings account or a 1 year CD until the bond rates start to go up again.  20 year bonds with 4% yield are not worth it at the moment.
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QuovatisQuovatis11 posts since
Feb 4, 2010
Rep Points: 63
3. Wednesday, April 21, 2010 - 5:02 PM
Bonds have nowhere to go but down.  The upside is very limited now.  Time to buy them was in the fall of 2008 (when I snapped up a muni at a 25% discount and it is now near face value).  I will get close to 7% YTM for ten years and capital gains when it matures.  In the current environment, it is not possible to reap these gains.
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AnonymousAnonymous2,281 posts since
May 9, 2010
Rep Points: 3,788
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