Time to invite Bonds to the party?

If idyllic thoughts of a world at peace, stable oil prices, 2% inflation and caring politicians have not crossed your mind recently, you might want to consider a discussion about bonds, instead.

Let me start by pointing out that I haven’t written about, discussed, recommended, or otherwise thought about bonds for years now. Because, with historically low interest rates and with the probability of capital loss should interest rates rise, it just didn’t make sense. In addition, many bond managers had no choice but to flock to “high yield” (read: risky) bonds to boost the low yields offered by Government and high-quality corporate bonds.

By the way, a brief digression. It’s highly possible that your Balanced Fund took a beating on both the equity and bond allocations last year. Just something to think about.

But how things have changed. Central Banks, having painted themselves into a dead-end with a protracted low-interest policy, had no option but to raise interest rates. In the hope that this might dampen an over-heated, inflationary economy.

Which brings me back to this discussion about bonds. The significant interest rate rise over the past year caused bond prices to fall, raising yields as a result. So finally, bonds seem to make sense again as a complementary investment to equities. And very much tying in with my investment philosophy that it’s not “what you buy, but when you buy” that’s the key to financial success. Contact (613) 447-1770 or yusuf.osman@gmii.ca​.

P.S. If you’re not sure what constitutes an investment-grade bond, just ask me.

Best regards,

About Yusuf

Yusuf Osman is a Financial Advisor at Global Maxfin Investments Inc., an independent full-service financial advisory firm dedicated to helping clients create financial freedom, security, and peace of mind. With over 30 years of experience in the finance industry, Yusuf is committed to educating, engaging, and inspiring as many people as possible to take control of their finances. He spends his days developing a thorough understanding of his clients’ lives, concerns, and dreams to help them build a financial plan that keeps pace with changes in both the markets and their lives. Yusuf graduated from the University of Ottawa with a bachelor’s degree in Science and earned an MBA in Finance from Queen’s University. To learn more about Yusuf and his Dynamic Wealth Program for Women, go to Dynamic Wealth Program for Women | Dynamic Wealth.