Are you an investor who has recently seen your short-term certificates of deposit mature? If so, you may be wondering what to do with your money now that the Federal Reserve’s rate-hiking campaign has come to an end. As rates on CDs have increased over the past year, you may have enjoyed higher yields than before. However, with the Fed expected to cut rates in the near future, you may be facing reinvestment risk as you look for new places to invest your cash.
At Extreme Investor Network, we understand the importance of reassessing your investment strategy in light of changing economic conditions. As certified financial planners and advisors, we want to help you navigate this conundrum and find the best ways to generate attractive yields on your idle cash.
One option to consider is diversifying into municipal bond portfolios. Municipal bonds offer tax-free income on a federal basis, and may also be free of state income taxes depending on where you reside. By extending maturities and investing in bonds with effective maturities of four to 10 years, you can lock in attractive yields while reducing price sensitivity compared to longer-dated issues.
In addition to municipal bonds, consider diversifying your fixed income investments across different classes. Exchange-traded funds like the iShares MBS ETF and the BlackRock Flexible Income ETF offer exposure to mortgage-backed securities and actively managed fixed income investments, respectively. By creating a diversified portfolio of fixed income securities with varying maturities and credit qualities, you can mitigate interest rate risk while still generating a steady stream of income.
At Extreme Investor Network, we believe in helping our clients navigate the ever-changing investment landscape with confidence. Let us help you make informed decisions about where to invest your money next, so you can continue to grow your wealth in a sustainable way. Visit our website to learn more about our personalized investment strategies and how we can help you achieve your financial goals.
