Is It Time To Lock in 5% Yields?

By Ben Carlson – A Wealth of Common Sense

A reader asks:

Say the 10 year got to 5% and you wanted to allocate some of the 40 side there. Wouldn’t you be better off buying the bonds straight up as opposed to an ETF like IEF? The ETF is no guarantee of principal return, no?

Fixed income has experienced one of its worst environments in history.

Yields were paltry for the entirety of the 2010s. Then Covid hit and we went to generational lows. That was good news for returns in the short-run but disastrous for longer-term returns. The comeuppance came in the form of rapidly rising inflation and yields coming out of the pandemic.