For the past four years investors have been on a quest for higher yield as the Fed has pushed rates lower to spur economic growth. It’s been a double-edged sword. With savers being gouged by lower rates, investors have thrown risk out the window in search of higher yield. Since 2007, over $1 trillion has poured into bond funds.
That’s a healthy sum of money. And investors have been rewarded, thanks to Fed policy. But how long will it last? Is now the best time to continue that trend? At some point interest rates will rise. Maybe next month. Or next year. The 30 year bull market in bonds will eventually end. And savers will rejoice in higher interest rates. That’s if their bond over allocation doesn’t hurt them in the process.
Until then, should investors really keep putting good money into an overpriced asset? When bond prices and yields move in opposite directions, common sense would tell us no.
The Bond Market Flood
Nothing has fueled bonds more than fear in the stock market. Since the financial crisis, more money has poured into bond funds than equity funds. Call it the great equity exodus. Continue Reading…
The stock market doesn’t close unexpectedly very often. If anything, it’s consistent in only closing on the weekends and federal holidays. But every once in a while, it has to make a rare, unexpected closure.
The IRS increased the amount you can save for retirement with a slight boost to the 401k contribution limits for 2013. Every year the IRS must calculate cost of living adjustments for the 401k and other retirement related plans when the CPI (Consumer Price Index) hits a certain threshold.