Saving for retirement is always filled with uncertainty: Past investment performance doesn’t indicate future gains, and you may not have saved enough for an unexpected health issue or other family emergency. But for decades, investors and advisers alike have followed one guiding light: You can count on bonds or bond funds for safe, stable returns.
That all changed in 2022, when inflation soared and forced the Federal Reserve to up interest rates. Those rate hikes hammered bond funds, which reflect bonds’ sensitivity to interest-rate changes: When interest rates rise, they erode the price of bonds and lift yields, which move in the opposite direction. The higher rates hit stock markets as well because they ramped up borrowing costs for companies.
That left people who were feeling the pain of inflation looking for answers, says John Bovard, a certified financial planner in…
