Characteristics Of Bonds Seniors Should Consider In An Income Investing Portfolio

Characteristics Of Bonds Seniors Should Consider In An Income Investing Portfolio

Bonds have been for always considered as the basis of investing income for many years now, and this is not about to change any time soon. Compared to stocks, bonds normally fluctuate much less and this is one thing that makes them the cornerstone of income investing. Even though bonds offer more limited profits, investing in bonds is a good step because you will be able to recoup your investment in case of bankruptcy. Of course, there are a number of risks involved in investing in bonds. Actually, bonds certain distinctive set of risks particularly for an income investor. For seniors who want to put together their income investing portfolios with bonds, here are what to look for.

  1. Bond duration

Bond duration is arguably the biggest risk of bonds. When putting together your income investing portfolio, you should avoid buying bonds that take more than 5-8 years to mature. This is a long period and due to unseen changes, bonds can lose their value significantly in the event that interest rates move sharply.

  1. Your choices

Your choices typically include bonds such as bond funds and municipal bonds. Municipal bonds usually offer tax advantage, but this doesn’t mean that they are the best choices for income investing. A better choice for income investing that most seniors normally opt for are the bond funds and Medicare Supplement plans 2019 with

  1. Foreign bonds

When considering bonds as income investing, you should always consider avoiding foreign bonds. This is mainly because foreign bonds tend to pose some real risks, which you might not be willing to take. Only include foreign bonds in your income investing portfolio if you have an in-depth understanding of currencies.

  1. The percentage of your portfolio

While many financial experts normally advice that the percentage of what goes into bonds as your income investing portfolio should be the same as your age, this might not be applicable to seniors sometimes. For instance, if you are 65, then 65 percent of your investing income should be 65 percent. But if you think this rule is favorable to you, then you can go ahead and apply it. Income investing is something that can give you a hard time to understand. And due to the multiple available options, you might not be able to easily choose which one is best for your situation. So, it’s better to consult widely before making any income investing decision.