A question for those who maintain a balanced portfolio of stocks and fixed income:
There is a strong belief in the investment world that the expected long term returns from equity will be in the order of 8% or perhaps 7%. The returns of fixed income are expected to be in the order of 2 or 3 % less.
I’ve noticed recent new offerings of bonds that are rated BBB (borderline junk I suppose) that maintain 5 to 30 year maturities, paying 7.5% per annum or more.
I would be very happy to collect 7% over the next 10 / 15 years, as this will more than meet my investment objectives, because when all is said and done, this is what matters the most – that we don’t take on more risk than required and that we properly manage portfolio risk.
Would it be prudent to overweight a portfolio with such fixed income products, as a diverse basket of such bonds? Won’t this still be safer than equity and meet return objectives?
Note: can assume that reinvestment of returns can go into safe fixed income, say 5 year Provincial bonds. Thanks in advance….
There is a strong belief in the investment world that the expected long term returns from equity will be in the order of 8% or perhaps 7%. The returns of fixed income are expected to be in the order of 2 or 3 % less.
I’ve noticed recent new offerings of bonds that are rated BBB (borderline junk I suppose) that maintain 5 to 30 year maturities, paying 7.5% per annum or more.
I would be very happy to collect 7% over the next 10 / 15 years, as this will more than meet my investment objectives, because when all is said and done, this is what matters the most – that we don’t take on more risk than required and that we properly manage portfolio risk.
Would it be prudent to overweight a portfolio with such fixed income products, as a diverse basket of such bonds? Won’t this still be safer than equity and meet return objectives?
Note: can assume that reinvestment of returns can go into safe fixed income, say 5 year Provincial bonds. Thanks in advance….