Bonds are a core component of any well-diversified investment portfolio. Their role is two-fold: To generate income and bolster returns during market declines. In 2022, bonds reminded investors of their utility as shock-absorbers, with most fixed income categories losing less ground than the broader stock market. (But not this year.)
Still, whether you’re age 20 or 70, you’ll want at least some exposure to bond ETFs in your portfolio for the long run. That is, unless you can stomach a potentially big decline in value when the stock market experiences one of its inevitable drops.
Bond values move inversely to interest rate changes. When interest rates rise, bond values decline, and vice versa. With interest rates projected to keep rising under present conditions, It’s important to keep bond ETF maturities to the short term (one to three years) or intermediate term (two to 10 years). That’s because…
