6 questions for savers and bond investors

News Article | May 23, 2017 | By Sierra Investment Management

MarketWatch (May 23, 2017): The Federal Reserve is raising interest rates, and there are several questions that savers and bond investors would like answered.

For example, to be blunt: Is my savings account going to pay any worthwhile interest at some point?! (The answer: probably not soon. But there are alternatives.)

If this all sounds familiar, it should: Many bond-market strategists had expected bond yields would be a lot higher by this point in the economic recovery, perhaps even making a savings account desirable. But a climb in rates seems to be getting closer.

Amid such developments, “you need to be really careful about how you invest the fixed-income part of your portfolio,” says Terri Spath, chief investment officer at Sierra Investment Management in Santa Monica, Calif. 

She and others say there are some smarter ways to play this: Avoid putting any cash that might be needed soon into bonds. Keep additional funds around to invest later, at potentially higher rates. Dial back on rate-sensitive holdings, and further limit risk by owning a range of U.S. and foreign bonds.

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Sierra Investment Management