6 Best Fixed Income Investments For A Low-Rate Environment

There are no signs that the record low interest rates we are seeing in 2020 will change. Jerome Powell, the chair of the Fed, recently declared his desire to maintain low rates at least through 2023. Government bond actual yields, or yields after inflation, are nevertheless negative.

Fixed-income investors have difficulties in this context of historically low interest rates, particularly those who are approaching or have reached retirement. There is no magic bullet, but there are a number of approaches you should think about as you negotiate these treacherous waters.

Adjust Your Expectations

Setting realistic expectations is the first step in fixed-income investing at a period of historically low interest rates. It is absurd to anticipate 5 percent from a low-risk investment given that 30-year Treasury rates are below 1.5 percent and shorter-duration yields are substantially below 1 percent. As we’ll see below, there are some fixed-income investments that offer larger rates but also carry more risk.

Sometimes it makes sense to take on extra risk. However, it’s critical to comprehend these risks and how they could impact your total portfolio and financial objectives. This can entail a little bit more credit risk acceptance for fixed income investors…