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"Most investors can be relatively comfortable investing with a five-year horizon. You’ll face some emotional challenges, especially when markets are volatile (and short-term volatility is almost a given with higher-yielding bonds), but if you can sit tight for a few years, history suggests your bond investments can gain even if rates rise. We’ll present two simple scenarios to show how this works. Let’s say you own a portfolio of bonds spread across maturities from one to five years, with an average yield of just over 3% and an average duration (or interest-rate risk) of just under three years. Given the level of US Treasury yields today, this portfolio would include high-yield investments. In the first scenario, rates don’t change and you earn a little more than 3% over a five-year time period (Display, blue line)."
"Most investors can be relatively comfortable investing with a five-year horizon. You’ll face some emotional challenges, especially when markets are volatile (and short-term volatility is almost a given with higher-yielding bonds), but if you can sit tight for a few years, history suggests your bond investments can gain even if rates rise. We’ll present two simple scenarios to show how this works. Let’s say you own a portfolio of bonds spread across maturities from one to five years, with an average yield of just over 3% and an average duration (or interest-rate risk) of just under three years. Given the level of US Treasury yields today, this portfolio would include high-yield investments. In the first scenario, rates don’t change and you earn a little more than 3% over a five-year time period (Display, blue line)."
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