Hi everyone,
Over the past months, I’ve been allocating heavily into stocks, especially during the recent pullbacks. However, I’m now looking to balance my portfolio by building a stronger position in assets considered safer. Given that interest rates are still high, and with the likelihood of future rate cuts outweighing further hikes I believe this is still a good window of opportunity. And i feel like If I don’t take advantage of this, I might regret it later.
At the moment, I already hold bank deposits and some government bonds issued by my country (i'm european). I’m pausing further accumulation in stocks and stock ETFs for now.
After doing some research, the options I'm considering include:
* Corporate bonds
* U.S. Treasury bonds
* Corporate/government bond ETFs with distribution policies (in either the U.S. or Europe)
Currently, my available capital is in euros, and my main objective is to increase my passive income.
My investment horizon is flexible — I can hold these assets for 2, 3, 5, 10, maybe even 20 years if necessary.
At this point, the simplest solution in my mind would be to invest in long-term Microsoft bonds (15–20 years) offering a 4.5–5% coupon. Microsoft has the highest possible credit rating (AAA), and, to me, their coupon payments feel even more reliable to me than those from my country's issued bonds. Moreover, if interest rates decline, the bond price should appreciate, and if they don’t, I would still collect a solid yield. I'm fine with both scenarios.
U.S. Treasuries are a comparable option, but the political risk surrounding them gives me some hesitation. We've already seen how much can change within just a few months, and the longer the time horizon, the greater the unpredictability.
Bond ETFs are appealing because they offer euro-denominated alternatives, unlike the direct bond investments mentioned above. However, based on historical charts, they don’t seem particularly effective at preserving capital, and the income (through distributions) tends to fluctuate.
Any thoughts or suggestions?
I tried consulting ChatGPT for ideas, but I wasn’t fully convinced. I would rather hear the perspectives of real investors actively managing their own capital.
Thanks in advance!