In December 2021, the same organization borrowed for one year at 1.06% and for nine years at 2.00%. The one-year deal was fair at the time, as 90-day T-bills were at 0.17%. But the 2.00% bond due at the end of 2030 now trades at 83, representing a price 17% below its original par value. That's the difference between a cash equivalent where you have limited risk to principal due to the short time frame-and an IOU with a long-enough maturity (duration) to get you in trouble.
Longer duration is back in favor, and the price cut on that 2% Farm Credit bond (now an eight-year note) boosts its yield to 4.6%, assuming it's held to maturity. But the low coupon means the current yield, or what you'll earn in annual income, is just 2.4%-unappealing for income-first investors. There are scads of similar listings: deeply discounted principal for a fine long-term trade, but scant immediate income and a long wait for the full return of capital.
Bu hikaye Kiplinger's Personal Finance dergisinin March 2023 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Kiplinger's Personal Finance dergisinin March 2023 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
FREE HELP FOR COLLEGEBOUND STUDENTS
This program’s mentors assist applicants as they fill out the FAFSA, write essays and more.
WHAT YOU SHOULD KNOW ABOUT SPOUSAL IRAS
You typically need earned income to contribute to an individual retirement account, but a spousal IRA provides an important exception to this rule.
SELLING SHARES? HERE'S HOW TO MINIMIZE TAXES ON YOUR GAINS
ET'S say you've been regularly buying shares in a booming tech company over the past few years, but now you want to start taking some of those profits, perhaps to rebalance your portfolio.
Strategies for Novice Investors
AS part of a lifes kills program for young, single mothers, I was asked to teach a class on how to get on top of your finances.
ANSWERS TO YOUR 529 PLAN QUESTIONS
Thanks to recent policy changes, families have more options for what to do with money sitting in these tax-advantaged accounts.
Rate-Cut Winners and Losers
NOW that the Federal Reserve has cracked the interest rate ice, the next development will be to separate winners from losers.
SHOULD YOU BUY THESE RED-HOT FUNDS?
Covered-call ETFs are popular but come with plenty of caveats.
DIVIDEND STOCKS ARE READY TO REBOUND
Our favorite dividend payers are poised to benefit as falling interest rates lure investors back.
IS A 55+ COMMUNITY RIGHT FOR YOU?
These age-restricted developments appeal to older adults seeking abundant amenities and an active lifestyle.
AT LONG LAST, RATES ARE DROPPING
Consider these portfolio moves now that the Federal Reserve has cut its benchmark interest rate.