For the first time in nearly 3 years, I am starting to return to the “low-risk, safe haven” bond market and bond fund/ETF investments. I wrote about the risks previously in January/February 2021 (TWO BIG INVESTMENT CONCERNS RIGHT NOW: RISING BOND RATES AND RISING INFLATION | BRIGHTER DAYS LIFE COACHING® and STORM CLOUDS ON THE HORIZON: THE BOND MARKETS AND THE “LOW-RISK SAFE HAVEN” FACADE | BRIGHTER DAYS LIFE COACHING®). Since writing those posts nearly three years ago, longer-term bonds and bond funds/ETFs have dropped 46% which is very unusual for the bond market when considering its longer-term history as a low-risk, safe haven investment – these losses are more typical of a stock market decline than a bond market decline. Due to this outsized drop and other factors, longer-term bonds and bond funds/ETFs have now become very attractive in my opinion – and I will continue buying into them on any future weakness.

Some of the reasons I think longer-term bonds and bond funds/ETFs might be a good investment going forward include the following:

1) The high interest rates (and the corresponding low bond prices since interest rates and prices on bonds are inversely related) is likely to make the United States (and other nations) inclined to provide less fiscal support and/or higher taxation in future years due to the higher cost of servicing debt – inflation would be another contributor to this,

2) The hesitancy of the Federal Reserve to provide as much economic support in the future as they have in the past in terms of interest rate reductions and Quantitative Easing (QE) for buying bonds and such,

3) a deteriorating economy and corporate earnings due to the combination of the above two factors which is likely (at some point) to result in substantial stock market declines and corresponding gains in low-risk, safe haven investments such as bonds and bond funds/ETFs. Much of the gains experienced in the stock market tend to be earnings, economy, and policy related.

These are some of things I’m seeing on the horizon right now. Lots of things to ponder and position for – especially since historical, low-risk, safe haven investments seem to be poised to regain their previous luster in the years to come. As such, perhaps one of the better longer-term investment strategies might be to start buying into longer term bonds and bond funds/ETFs.

For perspective, take a look at the 10-year, 20-year, and 30-year treasury yields (prices move in the opposite direction of yields) which had been falling for 40 about years but are now starting to normalize a bit. The last time they went up consistently was during the 1960s and 1970s but are now starting to rise again.

The bottom line is the prices of bonds and bond funds/ETFs are starting to normalize a bit which means substantial gains could be experienced by bond market and bond fund/ETF investors in the years to come. So, it might be wise to start positioning accordingly.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/).

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow!

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