The article discusses how higher interest rates can provide unique opportunities for income-oriented investors, despite the financial strain most citizens face from inflation. As bond prices decrease with rising yields, investors can buy bonds at a lower price and potentially secure higher returns. While diversifying into dividend stocks is an option, the volatility and monitoring challenges may deter some. The piece also highlights the advantages of income-focused ETFs, which provide diversification and require less active management compared to individual stocks.
Many income-oriented investors lack the available time to monitor a portfolio of dividend stocks, thus leaving higher yields on the table for lower yielding bonds.
Higher interest rates suppress bond prices as yields rise, making the purchase of bonds cheaper, allowing investors to lock in higher yields.
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