Many of us have heard of typical investment risks, such as market risks, liquidity risks, credit risks, and concentration risks. But what is reinvestment risk? In today’s episode, we’ll explain what reinvestment risk is and how the fear of recent events might be driving this risk.
Between the pandemic, bank crashes, and high investment rates, it can be hard not to get caught up in recent bad news. However, trying to predict when to buy and sell investments based on short-term trends is generally not a sound strategy for long-term investing success. Join Don as we discuss reinvestment risks, recency bias, bonds, and the importance of having a diversified portfolio that aligns with your goals.
Here’s some of what we discuss in this episode:
- Don discusses the fees for credit transactions that are becoming more frequent. [2:56]
- What is reinvestment risk? [5:27]
- The two classes of CD and bond buyers right now. [13:26]
- How bonds should act as a stabilizer in a portfolio. [15:01]
- How rebalancing, patience, discipline and understanding play a huge part in a sound investment strategy. [18:53]
If you have any questions about what we discussed in this episode, please reach out and we’d be happy to provide answers.