The Importance of Treasuries 2: The Value of High-Yield Bond Reinvestment

Reinvesting bond payments is an integral part of calculating the total return of your bond investments.

But what if we used those payments to build a high-yielding income portfolio? We would have two goals: "safety of principal" and beating inflation.

Instead of reinvesting your 4% coupon payments into 4% bonds, you could invest in closed-end funds that pay 10%.

We would still protect our nest egg (safely investing in treasuries), but we would have an entirely new portfolio to combat inflation.

Inflation comes for all of us, and we are especially vulnerable during retirement. We must earn at least 10% to ensure our money grows faster than inflation. How we do it is up to us. Good Luck!