Passive Bond Buying is Dead. Why an Active Strategy is the Best Bet
A lot of people plan for retirement, ensuring that they have enough funds to live a comfortable life when income from employment stops coming in. One way to save for retirement is through bonds. In previous years, there used to be a simple guideline for those who opted to save with bonds. If you’re 65 years old, the percentage of bonds in your portfolio should be 65%, matching your age. As you get older, this percentage will increase. With this guideline, you would rely on payouts regardless of stock market fluctuations.
This is not the case nowadays. Bond prices have now reached record highs as a result of slow growth and changes in monetary policies. You’ll notice low interest rates and longer investment periods. There really is no single approach when it comes to investing in bonds. Here are three reasons why taking the passive bond buying route is not enough.