An Independent Registered Investment Advisory


    An Excerpt from our November 2019 Newsletter

    Long-term bonds will be a drag on portfolio performance, especially in target date retirement plan accounts, in the years ahead. Target date portfolios increase the percentage of bonds each year until bonds move closer to 80% of the portfolio at the target retirement date. Using today's 1.75% 10-year bond yield as a starting point, interest rates will probably be higher in the long-term, making purchases now and for the next few years very unattractive! As interest rates rise, bond prices decline. During the last nearly 40 years, since 1981, interest rates have declined, pushing up bond prices as well as all other assests, including stocks and real estate. That will reverse to the detriment of long maturity bondholders especially.  Contact us if you want to discuss why target date funds may not be a good option for the long term.


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