Higher yields are available, but there’s a hitch. After more than a decade and a half of well below average interest returns from fixed-income securities (most are bonds), the pendulum of interest rates is now swinging toward levels that had been considered “normal” over many decades in the past. Way back when, interest income from investment portfolios that had a substantial portion in bonds was often sufficient, combined with pension payments and Social Security benefits, to provide a comfortable lifestyle for folks in their later years. Then came the banking crisis of 2007-9 and the Federal Reserve Board, this country’s central bank, plunged interest rates to historically low levels to keep the economy from collapsing. As rates fell, bond prices rose. Those who held bonds reaped hefty profits . . . if they sold prior to maturity. But people who depended on interest income came up short when trying to make ends meet. Where to go now? There are a number of choices, n
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Management, inc. and former Managing Editor of The Value Line Investment Survey.