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Investing for income

May 02, 2018
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Investing for income in a rising rate market can be tricky. As interest rates go up, the value of bonds go down, causing the potential for short term losses. But, when interest rates go up, the yield on bonds becomes more attractive often causing investors to buy more bonds.

The first quarter of 2018 was difficult for fixed income investors, but the good news is that the outlook has improved for income investors moving forward. Yield levels have been a good indicator of future total returns, so increased yield levels may bode well longer term. Whether investing purely for income or within a balanced stock and bond portfolio, we believe that diversification remains a prudent principle to manage interest rate and credit/default risk.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Investing involves risk including possible loss of principal.