No. of Recommendations: 5
To the extent a utility stock is like a bond -- they will behave like bonds. But keep these points in mind

#1 Bonds are far less risky than bond funds if/when interest rates start rising. If you keep a bond til maturity you will get the face value back (assuming no defaults)

#2 Unlike Bonds or Bond Funds, utilities actually can earn money -- i.e. they are not just a financial instrument. So even if they drop in value, that drop will be less percentage wise than any bond or bond fund. Caveat - any company can go bust e.g. General Motors, but absent such the Utilities will do better.

#3 You post sound like you are looking for yield/income. That is fine if you expect to die or otherwise not need the money in the next few years. But if you expect to be spending money in a 15 or 20 years, you need some growth or you will give up a lot of purchasing power.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.