Fear and concern over yields with safe secure money should be at the forefront for any retiree or person with limited resources. Especially if maintaining a current lifestyle is important and the goal.
In an era of money market funds yielding next to nothing, fear of inflation, and concern regarding out of control government spending concern over where to keep important money becomes an even more difficult question. The natural move for most planners working with our target market would be to the bond market.
Bonds provide income and safety...or do they?
Take a look at history before you jump on the bond bandwagon.
Let's start with our most trusted and secure investment, US Treasuries. At today's interest rates, a 30 year bond earning 4%. If bond rates increase 1% over the life of the bond, the value is reduced by 25%. If the bond is held to maturity the full value would be paid, but what if it is needed for income, emergencies, or for heirs prior to the 30 year time period?
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