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Avraham "AY" Rappaport, CLTC
President, Financial Professional
Yaniv "Jay" Natanov
President, Financial Planner
Eli Rappaport
Vice President, Financial Planner
Shlomo Rosenstein
Financial Professional
Ozzie Marizan
Financial Planner
Joseph Greer
Employee Benefits Administrator
Dylan Pinsky
Client Relations Manager
Premier Financial
6395 Dobbin Road, Suite 102
Columbia, MD 21045
Phone: 240-309-6001
Email: dylan.pinsky@prudential.com
Website: premierfinancial1.com
January/February 2024
Weigh in on the Barbell Strategy
You don’t have to be a fitness buff to know that a barbell is a long bar with weights at either end that’s used for strength training and bodybuilding. You might have used one at the gym. But what is the barbell investing strategy?
A Different Approach
Investors who employ a barbell strategy choose investments that represent opposite ends of the risk spectrum while ignoring anything in the middle. Although this approach more commonly appeals to fixed-income investors, it may be attractive to certain equity investors as well.How It Works
Fixed-income investors create a portfolio consisting of half short-term bonds and half long-term holdings. With this strategy, investors can take advantage of current interest rates by investing in short-term bonds while benefitting from the higher yields offered by long-term bonds. When interest rates are rising, investors can reinvest in bonds paying higher rates as their short-term bonds come due. When rates fall, investors have a cushion because their long-term bonds have locked in higher rates.Not Without Risk
Certain risks are inherent to bond investments. Interest rate risk is the potential for a change in interest rates to reduce the value of fixed-rate investments. As interest rates rise, bond prices typically fall, and vice versa. Inflation risk is the risk that rising inflation will lower the purchasing power of your bonds. Reinvestment risk is the possibility of reinvesting money at a lower interest rate.A Barbell Strategy with Equities
Equities investors might use a barbell strategy to create a portfolio comprised of half stocks and half fixed-income investments. Another option is to pair the stocks of large, stable companies with riskier stock investments, such as emerging markets.Look for Opportunity
The best time for bond investors to implement a barbell strategy is when there are significant gaps between short-term and long-term bond yields since this approach is closely tied to interest rates. Keep in mind that a barbell strategy requires frequent monitoring by investors and their financial professional to be successful.1052399-00003-00
Premier Financial is not affiliated with Prudential Financial. Premier Financial sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Premier Financial is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Premier Financial and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Dylan Pinsky is employed by Eli Rappaport and not The Prudential Insurance Company of America or its subsidiaries.
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