Time to buy some bond funds for retired guy?

[gquiring]

So my CD renewed today at 1.01%. I can't take it. These CD rates the past few years I can't get ahead with these low rates. I'm retired at late 50's. No pension. Just my savings. I don't see the rate going up anytime soon, it looks like at least a couple of years of waiting.

Would it be reasonable to invest in some high yield bond funds paying around 5%. I currently have a couple that have been paying around 5.5% but the value has gone down a full point since I bought them several years ago.

 

[samm]

Forbes: High yield corporate bond default rate will soar

Would it be reasonable to invest in some high yield bond funds paying around 5%.

Forbes says the high yield corporate bond default rate will soar.
https://www.forbes.com/sites/mayrar...-level-in-more-than-three-years/#1cbc4d627c1b

 

[samm]

Fitch say High Yield Bond Default Rate to Hit 10-Year High

Fitch say High Yield Bond Default Rate to Hit 10-Year High


https://www.fitchratings.com/resear...atings-New York-14,a new Fitch Ratings report.

 

[OldShooter]

... Would it be reasonable to invest in some high yield bond funds paying around 5%. I currently have a couple that have been paying around 5.5% but the value has gone down a full point since I bought them several years ago.

No free lunch. More yield and more risk come as a package. Make sure you really understand what you are buying before you do anything else.

If your only experience is with CDs, risky bond funds may not be a good idea for you. There are people who will be along soon who can suggest alternatives.

 

[samm]

Edward Altman estimates 8-20% of High Yield Bonds Default

I do not want to provide investment advice...but I do want to share this info on the VERY HIGH risks of corporate bonds today, especially high yield bonds.

Edward Altman is a bond expert I have followed for 20 years. He is highly respected, which is why the Economist goes to him for insights on the bond market.

In a high yield bond default, the investor receives NOTHING until the claims of the higher rated debt holders are satisfied. In other words, a high yield bond may offer a 5% yield with the risk of a 100% loss of principal. Attractive? You decide.

https://www.stern.nyu.edu/experienc...-rated-speculative-grade-will-default-next-12

 

[Montecfo]

I think high told bonds can be investible, but I consider them part of my equity allocation. They are not a suitable replacement riskwise for CDs.

 

[jazz4cash]

Nobody likes these CD rates, but why not look at a higher rated fund that would double or triple the CD rate without the high yield risk?

 

[pb4uski]

I think that I would take a chance on a 1.15% or 1.25% online saving account rather than a 1.01% CD.

The 3.0% and 3.5% 5-year CDs that many of us gorged out on in 2019 are looking pretty good right now.