Should I prioritize stability or long-term bond returns?
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If longer-duration bonds are more sensitive to changes in yields, should I consider short-term Treasuries for greater stability? Or could being cautious in the bond market actually limit potential for better long-term returns?
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Longer-duration bonds can be a bit tricky since they tend to be more volatile, but they usually provide better returns over time. They’re a good fit for individuals who can hold onto their investments for a while and are comfortable taking on some risk.
On the flip side, short-term bonds are much steadier. They help protect your money because they're less affected by changes in interest rates, making them a safer choice, especially when people expect rates to rise.
So, in my opinion, having a mix of both long and short-term bonds is probably the best way to create a strong investment portfolio.