Bond investments — safer than stocks?
Hi Terry:
Just wanted your opinion on some of the investments which I have and if they are appropriate for my age and situation. I am 64 and work pretty much full time (borderline), maybe 34-35 hrs week.
I have a good portion of my investments, but not all, in Class C Bond funds with BMO Harris.
They at Harris advised me and I agree that these are safer than having the money in stocks, especially if I choose to have more conservative investments. Again, these are not my sole savings only, but I do have a fairly good portion in these funds.
Do you think this is a good choice for me?
Thank you for your advice.
Terry Says
Please read my recent column: Beware of Bonds.
Bond funds perform well when interest rates are falling. That’s because everyone wants to buy them to get the higher yields. so in recent days, prices of bonds have been rising.
But if the current situation leads to a recession, bond funds could have a problem if they have invested in bonds of companies that can’t make it through the recession, and pay the promised interest rates. These days, many “investment grade” bonds are just at the brink of falling below investment grade. If that happened you could take a loss in your bond funds. Please read that column so you understand!
