NO DOUBT ABOUT IT, YOU ARE A thoughtful and inquisitive group. You send us many e-mails with astute questions about investing. We try to respond to most of them individually (although we can never give individual investment advice). Here are some queries about topics we thought many of you might be wondering about as well.
Why would anyone lock up money for 30 years when you can get a higher yield on a shorter-term bond? - RICHARD READY SHAWANO, WISC.
Take a moment to consider why short-term yields are more generous currently. Typically, the longer you lock up your money, the higher the interest rate you receive. But when investors see a recession looming and therefore expect interest rates to fall, they bid up long-term bond prices in anticipation, sometimes pushing yields on long bonds below short-term yields. (Prices and yields move in opposite directions.) That creates a “yield curve inversion.”
If we do head into a recession, look for the Federal Reserve to cut short-term rates—but rates will likely fall across the board. So you could end up wishing you had locked in today’s long-term rates, says Kathy Jones, chief fixed-income strategist for the Schwab Center for Financial Research. Long-term bonds also offer a higher potential for capital gains if rates head lower. The longer a bond is from maturity, the more sensitive its price is to changes in interest rates. A drop in interest rates could allow you to sell your long-term bond for a profit.
This story is from the June 2023 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the June 2023 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Your Vacation Home Could Provide Tax-free Income
If you plan to rent out your vacation home, it's important to understand how your proceeds will be taxed.
A SOLID YEAR FOR THE KIPLINGER 25
All but one of our favorite actively managed, no-load mutual funds gained ground as markets recovered.
IT'S NOT YOUR IMAGINATION: YOUR CEREAL BOX IS SHRINKING
To avoid raising prices, some manufacturers are reducing the size of common grocery items. Here’s how to fight back.
SHOULD YOU WORRY ABOUT BEING LAID OFF? IT DEPENDS ON YOUR INDUSTRY
Downsizing has hit certain sectors. But cutbacks may be slowing, and some companies are expanding.
How identity thieves are exploiting your trust
Con artists themselves are disguising as well-known brands to steal your money and personal information.
CUT THE COST OF YOUR WIRELESS BILL
AT&T, T-Mobile and Verizon dominate the market, but smaller outfits offer similar network coverage at lower prices.
MAKING HOME ENERGY MORE AFFORDABLE
Households in need can get energy-efficiency upgrades, help with utility bills and more from this nonprofit.
A HEAD START FOR SAVERS
The Saver's Credit is designed to help low- and middleincome taxpayers contribute to a retirement account.
Say I Love You With a Money Date
To nurture a lasting bond with your partner, meet regularly to talk about money.
Plan for Your Own Elder Care
AFTER I wrote a series of columns in 2022 about elder care planning for family members, I received a number of responses like this one: “What about married couples who have no children or whose family members don’t live nearby?” wrote one reader. “Or a single individual with no close relatives? How should these people plan for their own elder care?”