Take a New Look at Bonds as Rates Rise.

Kiplinger's Retirement Report, August, 2007

FOR THE first time in a year, long-term bonds are yielding more than short-term issues. As the yield curve begins to return to normal, some investors are buying bonds with longer maturities.

Still, the difference between short- and long-term yields is barely discernible. As of July 23, the 30-year Treasury bond was yielding 5.06% compared with 4.85% for the three-month Treasury bill--both low by past norms. So why tie up your money in bonds when money-market funds yield almost the same?

If you'll need cash at a specific time in the future, even the small uptick in rates may make it a good time to shift some of your cash holdings into bonds. You can lock in a reasonable rate for a longer term, which is impossible with a money-market fund.

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