2017-09-07 / The Motley Fool

Ask the Fool

Bond Timing

Q: When is it a good time to buy bonds?

— A. M., Portland, Oregon

A: First, understand that bond prices tend to fall as interest rates rise, because when new bonds are issued at higher rates, older bonds with lower rates will be less attractive. Right now, interest rates are more likely to rise than fall, as they’ve been near historic lows. Also, know that over most long periods, stocks have outperformed bonds. Despite all that, it can be worth adding some bonds to your portfolio for diversification. When the stock market tanks, bonds can offset some losses — though that’s not guaranteed.

There are many kinds of bonds. If you expect interest rates to rise, you might invest in shorter-term bonds instead of getting locked into a low rate for decades. You might also invest in actual individual bonds instead of bond mutual funds and ETFs, because if you hold them to maturity, you’ll get your principal back. (Funds and ETFs offer diversification, though, spreading your money across many bonds.) While government bonds are safest, they offer lower interest rates than, say, corporate bonds.

Alternatively, consider CDs, as they can offer interest rates competitive with those of high-quality bonds. Look up CD rates at bankrate.com.


Q: Where can I find the earnings reports that companies file with the SEC?

— J. C., Ashland, Kentucky

A: Many financial websites offer these filings in their stock data offerings, but you can go right to the horse’s mouth at www.sec.gov/edgar.shtml. Once there, click on “Search for Company Filings,” after which you can choose to look up filings using a company’s name or ticker symbol. It’s smart to regularly review 10-K (annual) and 10-Q (quarterly) reports, as they can tell you a lot about a company. ¦

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