Can You Still Own Bond ETFs When Interest Rates Are Rising?
What’s the safest way to own bonds when interest rates rise? That’s a question many investors, especially in bond ETFs, are asking today. Here's my answer.
Read More
At its most basic, inflation means it costs more money to buy goods and services. It means that dollar bill in your pocket isn’t worth as much right now as it was ten years ago.
For investors, inflation is widely believed to be detrimental to bonds, but there are conflicting opinions on how it influences stocks. In a nutshell, the positive impact of inflation on the top line is nullified by various associated costs, resulting in a neutral bottom line. So the equity side of the balance sheet faces almost no impact from inflation, resulting in a neutral return on equity but a higher debt-to-equity ratio.
It’s worth pointing out, however, that inflation is intimately tied to interest rates. Inflation is the number-one driver of higher interest rates, and that’s controlled to some extent by the Federal Reserve.
Throughout its history, the Fed’s priorities have evolved to reflect changes in the economy. Prior to World War II, its role generally remained limited to maintaining financial market stability and preserving the value of the dollar. With the arrival of the war, the Fed’s policy shifted to help keep interest rates low to facilitate the government’s war borrowings. In the decades after the war, the Fed’s primary objective was to keep inflation tamped down – occasionally raising interest rates to “remove the punch bowl just as the party was getting started.”
In short, forecasting the dollar’s trend is a notoriously difficult task due to the myriad of variables involved. For investors, the overall economy is worth keeping an eye on, however, the answer to the “what to do with your money” question is obviously to invest it.
Investing puts your money to work for you and offers the possibility of outpacing inflation and even multiplying it over time.
To learn more about stocks and investing, download our FREE report, How to Invest in Stocks and Other Investing Basics, today. You’ll learn about the four types of stocks, what it takes to be a successful investor, and you’ll discover five reasons you should skip the broker and invest on your own.
What’s the safest way to own bonds when interest rates rise? That’s a question many investors, especially in bond ETFs, are asking today. Here's my answer.
Read More
We don't normally think of technology stocks as being "cheap." But there are a lot of bargain tech stocks out there now. Here are two I like.
Read More
The war in Ukraine has pushed wheat prices to record highs. Buy these two wheat stocks (and one ETF) while the rest of the market flounders.
Read More
While metals have retreated in recent weeks, shares of shipping companies are on the rise. Here are my favorite shipping stocks and ETFs.
Read More
The 10 highest paying dividend stocks in the Dow Jones Industrial all yield more than 3%. But which of them would I buy today?
Read More
Gold prices have been in decline despite the weakened dollar. What will it take for the yellow metal to shine again?
Read More
They haven't gotten going just yet, but in the intermediate term gold stocks almost always benefit from rising interest rates, history shows.
Read More
Bitcoin - and other cryptocurrencies - are becoming the reserve currency for the digital age. Here's what that means - and how to profit.
Read More
While a surprisingly good year for the market, 2020 has not been kind to dividend payers. Here are 4 conservative dividend stocks for 2021.
Read More
Gold's value as a safe-haven instrument is undeniable, but gold as an investment loses much of its luster over the long haul.
Read More
Big money investors are as bearish as they've at they've been in the last two decades. So it's a good time to buy these safe haven ETFs.
Read More
The promise of rising interest rates spooks markets and investors, but it's good for certain stocks - REITs in particular.
Read More
In a struggling stock market, it makes sense to take on less risk in your investing. Low-beta stocks are a good place to start.
Read More
With housing demand still strong and the home improvement market growing, it's time to break down Lowe's vs. Home Depot and pick the better home improvement stock.
Read More
If you own a large dollar amount of individual MLPs, you may be best off holding them in a regular taxable brokerage account, and here's why.
Read More
Market volatility is unavoidable but these steps can help you protect your portfolio during market downturns.
Read More
Gold prices are in the midst of a major comeback. And Russia is having a more direct hand in the new gold bull market than you've heard.
Read More
Growth is difficult to come by in this market. Growth and income are even harder. The three best income stocks combine both elements.
Read More
Follow the 10 basic rules of investing and you'll be on your way to a strong and secure investment portfolio that the investing greats would be proud of.
Read More
Since the market bottom on March 6, 2009—when the Dow Jones Industrial Average sunk to 6,469.95—investors have lined their pockets with lots of coin. Sure, COVID sent the markets reeling—down to 19,173.98 on the Dow in March 2020—but since then, boy, have we Despite...
Read More