Bonds are paying again: how to think about fixed income
With ten-year yields above 4%, bonds once again offer meaningful income, but duration risk has not gone away.
After a decade of near-zero rates, a diversified bond fund now yields roughly 4.5%. That is enough to cover inflation in most forecasts and to cushion a stock-heavy portfolio when equities stumble.
The risks to weigh
Shorter-duration funds fall less when rates rise but give up some income. Many investors split the difference with a ladder of maturities, or hold a broad fund and rebalance once a year.
None of this is a forecast, and past performance does not predict future results. Fees, taxes and time horizon matter at least as much as the product itself, and a plan you can stick with through a bad year usually beats a clever one you abandon.
With ten-year yields above 4%, bonds once again offer meaningful income, but duration risk has not gone away.
A sensible next step
This article is for information only and is not investment advice. Figures are illustrative and may be delayed or simulated for demonstration purposes.
For information only — not investment advice.