Flynn advised its clients to move more money into shorter-term bonds due to their prices falling more and the yields rising more. It happened when the rates were rising. However, it is different now. It seems like the Fed might stop hiking rates. Then, it is to suggest that you can find higher-quality bonds for money you won’t need for five or more years. Plus, it could be with intermediate to long-term maturities because now these maturities are rising.
Flynn argued that now they are going longer with maturities. In addition, they extend duration under the guise so that this year rates could peak. Then, the Fed could be in a position to start decreasing the rates. He predicts this due to the recession this year. Therefore, if you invest money you might need for the next three years, he suggests that you should continue investing in shorter-term bonds.
He noted that many states were in better financial shape during pre-pandemic because municipal bonds prices fell. While they started to increase, yields rose. Thus, those in higher income tax brackets could try tax-free municipal bonds. However, there are still many mutual funds and ETFs that could be alternatives if you are not into a bond portfolio.
A low-cost investment grade bond fund is suitable if you expect a low-risk option. This fund invests in bonds with a maturity duration suitable for both short-term or long-term. But if you are willing to take an agreeable risk, you might choose a flexible income fund, Flynn suggested.
