By Nellie S. Huang
From Kiplinger’s Personal Finance
After a brutal 2022, the outlook for fixed-income investments is much improved for 2023.
With that in mind, here is a plan of action for your fixed-income portfolio in what promises to be a new bond market.
- Cash
- Treasuries
One strategy: Build a ladder of Treasury notes with maturities between one and 10 years, reinvesting the money from maturing one-year securities into new 10-year notes. “There’s less risk of getting it wrong, because you buy and hold,” says Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research. “If rates go up, you get more income, because you’re rolling up to higher yields. And if rates go down, you’ve already locked in higher yields.”
- Agency mortgage-backed securities
- Treasury inflation-protected securities
Although most analysts expect consumer prices for goods and services to fall overall, inflation may settle for a time at a higher level than some people expect. “Inflation is not dead, so maintain some TIPS exposure,” says John Lovito, co-chief investment officer of global fixed income at American Century Investments.
- Municipal bonds
- Corporate debt
(Nellie S. Huang is senior associate editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.)
©2023 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.
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