The new rules of bond investing

For today’s retired investor, safety is expensive

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Ahead of MoneySense‘s May 7 Invest for Success event, editor-in-chief David Thomas asked Tom Bradley, president and co-founder of Steadyhand Investment Funds about the brave new world of fixed-income investing in a time of rock-bottom—or even negative—interest rates. What does this mean for investors?

DT: For years, investors could get by on fairly simple rules of thumb when it came to figuring out what to do with the fixed-income part in building a smart portfolio. Today it’s a lot less straightforward isn’t it?

TB: A decade ago, government bond yields were running at 2-4% above inflation. If an investor couldn’t stomach the ups and downs of the stock market, they could hide in bonds and GICs. Accordingly, the rule-of-thumb for your stock weighting was ‘100 minus your age’ (i.e. at 70 years of age, stocks should make up 30% of your portfolio, with bonds taking the rest).

Today, safety is expensive—secure, low-volatility alternatives barely offset inflation. To ensure a sustainable income, retired investors need to own more stocks and higher risk fixed-income vehicles than they used to.

Find out what kind of stock picker you are »


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Want to learn more?

Hear Tom Bradley and others, including Kurt Reiman, chief investment strategist for BlackRock Canada, and MoneySense columnists Dan Bortolotti and Norm Rothery share more investing tips on May 7 in Toronto.

Tickets to Invest for Success are still available. Agenda and registration details are here.

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