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Special to CNBC.com
Bond investors need to think like lenders, because their money needs to be productive, said Bill Larkin, portfolio manager at Cabot Money Management.
In a money market right now, investors are only earning about $10 to $20 a year on a $100,000 investment, and "that's just not enough to meet anybody's investment objective," Larkin said.
Instead, Larkin offered five alternative strategies for bond investors to increase their returns:
- Move from money markets to short-term bonds of about three to seven years.
- Put money in three-year Treasury bills, which earn 10 times as much as a three-month Treasury bill. Also, two-year Treasurys will earn about $950 a year on a $100,000 investment.
- Buy US-backed agency bonds.
- Purchase investment-grade corporate bonds, such as General Electric [GE
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], CVS [CVS
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], Hewlett-Packard [HPQ
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] and Hess [HES
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].
- Invest in an exchange-traded fund. They are very diversified and transparent, they pay monthly and are liquid daily.
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More Market Intelligence:
- Which Transport Stock Got an 'Outperform' Rating?
- Falling VIX a 'Very Bad Sign': Market Expert's Warning
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More CNBC Data Pages:
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Companies That Reported Earnings Thursday:
AT&T [T
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McDonald's [MCD
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Travelers [TRV
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]
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Disclosures:
Disclosure information was not available for Larkin or his company.
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