Short-Term Bond Funds Are Safe
But most of these funds don't pay much more than 1%.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
I have money in short-term bond funds, and I’m worried about a hit from inflation. But if I keep the funds long enough, won’t the value improve as new money from maturing bonds is invested at higher rates? --W.K., via e-mail
If interest rates were to rise, you would probably lose some of your principal. But depending on the timing of cash flowing into and out of a fund, current yields would start to improve. So you would be looking at a small, one-time loss at worst.
The good news is that the principal in short-term funds is safe from interest-rate increases for now. And Kiplinger is forecasting a 2.3% increase in consumer prices this year, so we don’t think inflation will be a serious problem. More to the point, the Federal Reserve says it plans to keep short-term interest rates near zero until the unemployment rate drops substantially, and that probably won’t occur for at least two more years. The problem is that most of these funds are stuck with investments that don’t pay much more than 1%. Still, as substitutes for CDs or savings accounts, there’s nothing to worry about.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
My thanks to Jeff Kosnett for his help this month.
-
Here’s How to Stream the Super Bowl for LessWe'll show you the least expensive ways to stream football's biggest event.
-
The Cost of Leaving Your Money in a Low-Rate AccountWhy parking your cash in low-yield accounts could be costing you, and smarter alternatives that preserve liquidity while boosting returns.
-
I want to sell our beach house to retire now, but my wife wants to keep it.I want to sell the $610K vacation home and retire now, but my wife envisions a beach retirement in 8 years. We asked financial advisers to weigh in.
-
It’s Not Too Late to Boost Retirement Savings for 2018retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
Making the Most of a Health Savings Account Once You Turn Age 65
Making Your Money Last You’ll face a stiff penalty and taxes if you tap your health savings account for non-medical expenses before the age of 65. After that, the rules change.
-
Using a 529 Plan for High School
529 Plans You’re now able to withdraw up to $10,000 tax-free from a 529 plan each year for K-12 tuition.
-
Reporting Charitable IRA Distributions on Tax Returns Can Be Confusing
IRAs Taxpayers need to be careful when reporting charitable gifts from their IRA on their tax returns, or they may end up overpaying Uncle Sam.
-
Ex-Workers Get More Time to Repay 401(k) Loans401(k)s If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
The 11 Most Valuable Personal-Finance Lessons of 2018
Financial Planning How to reduce taxes and medical bills, help the next generation save for retirement and protect against identity theft were some of the issues on readers’ minds in 2018.
-
The Rules for Making a Tax-Free Donation from an IRA
IRAs Making tax-free gifts to charity from an IRA is gaining in popularity among older investors, thanks to changes under the new tax law. Here’s what you need to know to make a qualified charitable distribution.
-
New Rules on Capital Gainsinvesting Rates didn’t change, but they’re pegged to your income instead of your tax bracket.
