Today’s low interest rate environment has caused traditional certificate of deposit (CD) investors to look for safe alternatives which may provide a better return. Short term bond funds could be part of the answer. A Short-Term or duration fund (duration measures how sensitive a bond’s price is to a change in interest rates) is a fund that holds bonds that have an average maturity of 5 years or less. A shorter maturity equals a lower duration and less volatile price changes in the bond. An investor’s principal will fluctuate with these types of investments. However, that fluctuation is typically less than other longer term bond funds. The yield (or rate you earn) on these short-term funds is typically lower than funds with longer maturities. Some of these funds pay interest monthly.
Like all mutual funds, these funds are not NCUA or FDIC insured and loss of principal can occur. However, this type of investment may help an investor earn slightly higher rates than what they can currently earn on traditional CDs. If you are looking to earn a higher interest rate, please talk to one of our Investment Consultants to see if investing in Short-Term bond funds is right for you.
Securities and investment advisory services offered through Financial Network Investment Corporation, member SIPC - Founders Federal Credit Union, Founders Financial Group, LLC and Founders Insurance Services are not affiliated with Financial Network Investment Corporation. Financial Network Registered Sales Branches are located at 607 N. Main Street, Lancaster, SC 29720; 1290 Old Springdale Road, Rock Hill, SC 29730; 100 Springcrest Drive, Fort Mill, SC 29715; 1307 Boiling Springs Road, Spartanburg, SC 29303.
Not NCUA Insured - No Credit Union Guarantee - May Lose Value - Not Deposits - Not Insured by any Federal Government Agency.