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Dale Jackson

Your Personal Investor


There’s a glimmer of hope for retail investors who play by the diversification rules and hold a segment of fixed-income in their portfolios: yields are creeping up.

After a decade of barely keeping up with the inflation benchmark, guaranteed investment certificates (GICs) have topped three per cent. That takes some of the pressure off of the equity side of the portfolio and still provides a layer of safety in these volatile markets.  

The few extra basis points are a bonus considering the primary role of fixed-income is to provide a cushion for the entire portfolio. Unlike professional traders who buy and sell fixed-income products on the bond market, retail bond portfolios are intended to be held to maturity. In the 2008 financial meltdown, fixed-income saved many seniors who relied on their savings for day-to-day expenses, while equities lost over half their value in a few months.

While buy-and-hold may seem boring, there are strategies that can preserve that level of safety and maximize returns. The most common is laddering, where maturities are staggered over time to give the investor more opportunities to buy at the best going rate. In the current low-interest-rate environment, many advisors recommend a short ladder to be ready when yields eventually rise.

To maximize gains and offset risk, a good advisor can also diversify from low-risk, low-yield government bonds to higher-risk, higher-yield bonds like corporates and even junk.

There’s also a personal side to fixed-income portfolios. The proportion of fixed-income to equity should increase as the investor gets older and needs to withdraw sooner.   


February is Your Money Month at BNN Bloomberg. For more stories and practical advice on how to employ your money wisely, visit our Personal Finance page.