Simply put, bonds amount to debt with a promise to pay. Whether we’re talking about the various types (individual bonds vs. bond funds and/or short-term vs. long-term), the quality (credit and credit rating), or the timeline/maturity range, there’s a lot to consider.

Speaking in generalities, low-quality bonds with long maturity are the highest yielding bonds. Conversely, high-quality bonds with short maturities are the lowest yielding bonds.

Ideally, you’d want to build a quality portfolio over your given time horizon. For example, with an initial investment of $500,000, you could build a portfolio of bonds in $25,000 increments and have $25,000 maturing every four months for the next six years. This strategy, called Bond Laddering, is intended to significantly reduce the risk of rising interest rates. By having $25,000 bonds mature every six months, extending maturities and, theoreticaly, increasing yields, you could further address timeline and risk concerns.

Whether you want to sell or buy bonds, a professional’s experience should be a necessary component in helping guide you toward success. Get in touch with Rauch Financial Services to learn more.

_{This information is hypothetical and for discussion purposes only. It is not intended to represent any specific return, yield or investment. It is provided for illustrative purposes only and does not constitute a recommendation to invest in any particular fund or strategy and is not a promise of future performance, an estimate of actual returns or of the volatility any client portfolio may experience. Hypothetical results do not represent actual trading and do not reflect the impact of any fees, expenses or taxes applicable to an actual investment. Hypothetical and past performance are no guarantee of future results.}

_{Bond laddering does not assure a profit or protect against a loss in a declining market.}

_{Investments in fixed-income securities are subject to market, interest rate, credit and other risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline in the bond’s price. Credit risk is the risk that an issuer will default on payments of interest and/or principal. This risk is heightened in lower rated bonds. If sold prior to maturity, fixed income securities are subject to market risk. All fixed income investments may be worth less than their original cost upon redemption or maturity.}

_{Duration is a measure used to determine a bond’s or bond portfolio’s sensitivity to movements in interest rates. Generally, the longer the duration the more sensitive a bond or bond portfolio is to changes in interest rates.}