When investing in the fixed income market, trying to time when you should invest has been a losing proposition for the last 20 years. Investing in bonds of high quality, well-managed companies, municipalities and governments, that meet investing needs, is the philosophy we follow here at Fort Pitt Capital Group.
With interest rates expected to rise this year, staying short can be advantageous because you can then recoup the lost purchasing power at a faster rate. Selling longer term securities can often backfire, and certainly did last year when rates had an abrupt rise in yields. Knee-jerk decisions often unwind themselves as buyers see the selling as an opportunity to buy at a good level. However, just because the Fed is raising rates doesn’t necessarily translate to longer term rates rising in unison.
Investors should know their portfolio and make alterations as needs change. If you’re older, you may want to consider what your needs are and adjust your income segment to meet those needs. Remember the role bonds play in your portfolio to hedge against risk of a volatile stock market. And rarely, if ever, will you be able to purchase a security at exactly the right time to eliminate any negative return.