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| 4 Ways to More Effective Retirement Investing for 2009 By Chance Carson |
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| Written by Chance Carson |
| Monday, 27 April 2009 07:27 |
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Last year was not a good year for most investments except for US Treasury Bonds. For retirement-oriented investors, the question remains as to what to do next. Many people wonder where decent rates of return can be found with minimal risk. Although many seem to lean toward Treasury investments, they may now be priced too expensively. Chief Investment Officer Mohamed El-Erian of Pimco and popular financial columnist Andrew Bary both advise people to stay away from treasury bonds for a variety of reasons best outlined in a Barrons article, Get out now, published January 5, 2009 (search for title at: http://online.barrons.com/article). If Treasury products are no longer optimal, what other choices are appealing for the weary investor in 2009? Many advisors and experts are now pointing to four classes of assets that deserve your attention. This article focuses on the first three; the fourth one is discussed on a separate link listed below. * Mortgage Backed Securities * Treasury Inflation-Protected Securities-TIPS * Municipal Bonds * Investment Grade Corporate Bonds 1. Yields on mortgage-backed securities have been declining ever since the Federal government November 2008 announcement that it would purchase up to $500 billion of Ginnie Mae, Freddie Mac and Fannie Mae home mortgage-related bonds. But with the purchases just beginning in January, current yields of this battered asset class still look attractive relative to historical levels. Also, with the Fed's intervention, mortgage-backed securities now offer effectively the same Federal guarantee as U.S. Treasuries, but with higher yields. Consider iShares Barclays MBS Bond Fund (MBB), iShares Barclays Agency Bond Fund (AGZ) and SPDR Barclays Capital Mortgage Backed Bond ETF (MBG). 2. At the moment, TIPS prices are headed lower with fears of deflation. However, if the Federal stimulus packages prompt inflation, as many believe, TIPS will correspondingly produce better results. You will likely read many other articles on TIPS, so pay close attention to these two products; (TIP) iShares Barclays TIPS Bond Fund and (IPE) SPDR Barclays Capital TIPS, both on the NYSE. 3. Tax-free Municipal Bonds are approaching attractive levels compared to US Treasuries. For example, investment grade munis with their current 4-5% tax-free rates, are comparable to taxable yields on certificates of deposit that pay 6-7%. Among the worthy products to consider are the following: (PZA) PowerShares Insured National Municipal Bond Index Fund, (TFI) SPDR Lehman Municipal Bond ETF and (MUB) iShares S&P National Municipal Bond Index Fund. Another bond choice to study is a California fund, (CMF) iShares S&P California Municipal Bond Fund. One reason to watch this ETF fund is the pending Federal assistance programs under the stimulus packages. California is likely to benefit from these programs due to its enormous size and political importance. For the ultimate in credit safety, look at Market Vector's Pre-Refunded Municipal Index ETF (PRB). PRB is the first ETF investing 100% in pre-refunded municipal bonds. Pre-refunded municipals are issued to pay off existing, higher yielding bonds. These bonds are fully collateralized by U.S. Treasury securities, making them the only municipal bond class 100% fully guaranteed by the U.S. government. 4. High-Grade Corporate Bonds, also known as Investment-Grade Corporate Bonds, are very cheap at today's prices. Portfolio managers are currently buying corporate bonds issued by money-center banks, brokers and the largest insurers, as the ongoing government bailout may mitigate some of the risks of corporate defaults. For more details, read the www.AboutETFs.info article that focuses on corporate bond ETFs here: http://aboutetfs.info/Monthly-Income-Strategies.php . In summary, the four classes we mentioned here may suit your style for retirement-oriented, safer investments for 2009. We are presently researching preferred stocks and senior loans as other options for retired investors. Stay tuned to our websites for those articles and reports. Investors are reminded that our commentary does not guarantee results. Choices mentioned in this article do not imply specific investment advice for an individual and they may not suit your objectives. Alpine Strategies and its officers and staff are not soliciting the sale or purchase of any securities in this article. Our comments are based on opinions which may change at any time. You should perform due diligence and consultation with a professional prior to the sale or purchase of any investment security. About the Author: Chance Carson ownsAlpine Strategies in Colorado Springs, Colorado. Chance is the editor of AboutETFs.com, an informative Web site for retired investors, and http://www.AboutETFs.info , an exchange-traded funds research report website with complimentary monthly strategies. He welcomes your comments and thoughts. Write to ChanceCarson@AboutETFs.com . Kindly provided by MoneyHunter.org You are welcome to use this article on your own website, if you include the link just before this text. |
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