Bonds act like I.O.Us from the U.S. government, municipalities or corporations. Essentially, you are lending money to that organization for a certain amount of time which they agree to pay back with interest. When you’re young, you’ll probably rely more heavily on the long-term growth potential of stocks. But as your retirement time horizon shortens, adding income-generating investments like bonds can help minimize the impact of market swings.
While individual investors will have different goals and therefore different needs, over time you’ll likely want to gradually shift your asset allocation. You can accomplish this by adding individual bonds to your portfolio, or more conveniently by purchasing shares in one or more bond funds – mutual funds that pool investor assets to buy a large portfolio of bonds.
As interest rates fall, bond prices typically rise. Conversely, as interest rates rise, bond prices tend to fall. During times of rising rates, it’s often better to hold shorter duration bonds; as each bond matures, the proceeds can then be reinvested into a new bond paying a higher interest rate.
Your SunTrust Investment Service advisor (STIS) can be an invaluable aid in helping you structure a well-diversified portfolio, including bonds and/or bond funds.
Learn how our SunTrust SummitView goals-based planning approach can give you a clear view into all your stocks, bonds, retirement and savings accounts, allowing you and your advisor to better align your investments to your goals and objectives.
Investing in the bond market is subject to certain risks, including market, interest rate, issuer and inflation risk; investments may be worth more or less than the original cost when redeemed. The value of most bond strategies and fixed income securities are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and more volatile than securities with shorter durations.
Diversification does not ensure against loss and does not assure a profit.
Unlike a traditional IRA, a Roth IRA allows you to withdraw your money tax-free in retirement. Learn how to maximize your retirement savings.
Want to be a thoughtful investor? You’ll be well on your way by adhering to the following five simple tenets of investing.
Most people wonder if they’ll have enough to retire. Staying on top of your financial goals is important in the homestretch as you have less time to set aside savings.
Does your financial plan address more than just retirement? Find out what types of planning make sense for you.
Calculating annual required minimum distributions (RMDs) can be complex and mistakes can be exceedingly costly, so it’s important to consider an optimal withdrawal strategy.
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