There is now a tendency for higher interest rates. Total bond returns equal the coupon (interest payment) plus the price change impact of any interest rate change. Neither the interest rate alone nor the interest rate change alone determine the total return. Both have an impact. In the long run, higher rates are good for [Learn more…]
Bonds
What are I Bonds good for?
In my previous post, I described what an I Bond is. Here I will offer a few examples of how I Bonds might make sense in an investment portfolio. Recall that I Bonds are a sort of inflation-protected savings account. They earn interest every year equal to inflation plus a (currently small) fixed rate. The [Learn more…]
I Bonds: What they are and how they might fit into your portfolio
I Bonds are a kind of inflation-protected savings account. In this article, I’ll describe their general characteristics and some of their limitations. In a follow up article, I’ll describe when I Bonds can make sense as an investment. Series I Savings Bonds: Protection against inflation Series I Savings Bonds are inflation-protected U.S. Savings Bonds. Also [Learn more…]
Record low interest rates…Should you still hold bonds?
There has been a lot of talk in the press recently about bonds (just two recent examples – one in the Wall Street Journal and one in the Boston Globe). Most if not all of the articles make the following argument: Interest rates are at historic lows. Therefore, interest rates must Rise; Rise soon; Rise [Learn more…]