Today’s interest rate environment presents financial advisors with a conundrum – do I stay on the sidelines and wait for rates to rise before re-allocating my clients’ portfolios, or do I jump in now….what are the costs of waiting for rates to rise? We evaluate this question in the context of income-matching portfolios constructed with individual bonds. Income-matching portfolios consist of a series of individual bonds held to maturity whose redemptions and coupon payments provide cash flows that precisely match a client’s target income stream. We will compare the income-matching strategy to investing in short duration bond funds, holding cash or buying a CD to show it is better for investors to buy now than wait for rates to rise. Download Now…
