Are you growing weary of lending your money to the government? Good morning everyone and welcome to another Finance Friday. Many people invest in Bonds as a hedge to the stock markets. Traditionally, when the stock market drops, Bond yields go up, protecting the portfolio’s downside. The safest and most risk free of those bonds are U.S. Government Bonds.
This strategy has worked to help diversify portfolios, giving investors steady income with no investment risk. However, there have been some recent changes in how people want to diversify their income portion of their portfolios. Bonds are delivering lower returns, which has created a greater exposure to bond duration risk.
In 2025, U.S. Bonds were downgraded by Moody’s, which marked the last of the 3 top agencies to downgrade U.S. Bonds. The downgrade is due to an increasing burden of financing the government’s debt. This is causing investors to shift their fixed income dollars from bonds to other investments.
Some of the other investments include minerals, like gold and silver, crypto currency and alternative investments to name a few. Like most investment strategies, they have benefits and downsides and costs associated with them. If you saw a lower return on your investments for 2025, have a talk with your advisor to see how much your portfolio is weighted towards Bonds.
At the same time, alternative investments, including private equity, real estate assets, reinsurance, alternative lending, and venture capital—are becoming increasingly attractive for their potential to outperform the market, inflation protection and reduction of exposure to the stock market.
Now it’s your turn. Which of these strategies would you look more into as a replacement for bonds?
Please send me your answers and any additional questions to hector@hrcfin.com. Don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday discussion. Thank you again everybody, have a great weekend and we’ll see you next week for our Question of the Week.