Furthermore, if you are always buying and selling to catch the lows and the highs of the market, you could end up with a portfolio that doesn’t really meet your individual needs or match your tolerance for risk. And you’ll likely rack up some big transaction costs, too.
Make your investment decisions carefully. But until a crystal ball arrives, don’t try to stay one step ahead of the market - or you could find yourself falling even farther behind.
Use a “Ladder” to Climb Above Interest-rate Worries
If you depend on bonds for some of your income, what should you do if interest rates are down when your investments mature? Should you just “park” your money somewhere and wait for rates to rise again?
There may be a better solution. Consider building a “bond ladder” - a collection of short-term, medium-term and long-term bonds.
Once you have established a bond ladder, you are prepared for both rising and falling interest rates. When rates are rising, you can use the proceeds from your maturing bonds to invest in new ones at the higher levels. When market rates are falling, you’ll continue to benefit from the higher rates offered by your longer-term bonds even if you are purchasing bonds that have a lower rate with the money coming due.
See your financial advisor for help in putting together a bond ladder. It can be a great way to fight interest-rate worries.
Contact Wendell at Edward Jones www.edwardjones.com.
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