#CLEARNEWS

#CLEARNEWS

The Search: Income and Safety

Another fiscal quarter went by and the chairman of the Fed held off on raising interest rates again. It seems to be to the tune of a broken record, but investors are growing tired of riding out the historic low interest rates.Another fiscal quarter went by and the chairman of the Fed held off on raising interest rates again. It seems to be to the tune of a broken record, but investors are growing tired of riding out the historic low interest rates. Retirees and conservative investors typically could purchase high quality bonds, clip the coupon interest rate, and meet their short-term income needs. The fed funds rate began dropping in 2008, and by the beginning of 2009 it was at 0%. In the 6 years since investors have had to either erode their principle or take on more risk to achieve the level of income they were once used to. Taking on more risk works really well when the economy is strong like it has been over the same time period. When the economy shows weakness these higher risk bonds can have similar drops like stocks do. The consensus among most experts is it’s time to adjust our expectations about fixed income investments. Stick with high quality bonds if you need to rely on the income today - or - Accept the volatility of the higher risk bonds if you don’t need the income today.

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