NEW YORK ( MainStreet) -- Last week's disappointing jobs report has experts scrambling for answers. It looks like hopes for an accelerating economic recovery were a bit premature. Then again, maybe this was just a bump in the road.
What's it all mean for ordinary folk socking money away for retirement, shopping for mortgages - just trying to make sound financial decisions? The key takeaway: If you're generally happy with your financial setup, it probably doesn't make sense to do anything drastic, at least not until the situation is clearer.![]() |
While the experts talk Treasuries, we have the scoop for you on what a lackluster jobs report will mean for the average investor this month. |
But it's important to be aware that these stories are aimed at people who speculate on changes in bond prices. Jitters about the U.S. economy, the European debt crisis and other problems around the world, cause a "flight to safety" which causes investors to buy up Treasuries. That heightened demand pushes up Treasury prices. That's fine if price speculation is your game. But higher prices drive down bond yields, which is tough on people counting on steady income. This is probably not a good time for income-oriented, buy-and-hold investors to pile into bonds. The 10-year Treasury pays a scant 2%. If and when the recovery does pick up, your bonds could fall in value as demand shifts to newer bonds with higher yields. You would then have an unpleasant choice between living with below-market yields for the long term, or selling your bonds at a loss. Given these risks, ordinary bank savings are not so bad. You won't earn much, but your principal will be safe - and available to invest for bigger returns after the economic situation is clearer.