| Yields on Treasurys, corporate bonds and certificates of deposit (CDs) are higher than where they were a year ago and much higher than they were a few years back. As a result, one of the most common questions I'm asked is whether investors should lock in these rates for the long term. I don't think that's the right move. Short-term rates are higher than long-term rates across many kinds of fixed income investments right now, which is the opposite of how things usually are. You can get 5.39% on a 4-week Treasury and 5.4% on an 8-week Treasury, which is the highest-yielding Treasury. But if you go out to one year, you'll earn 4.67%. Beyond that, the 5-year Treasury yields 3.89% and the 10-year yields 4.01%. (Keep in mind that all of these rates are annualized.) The best six-month CD rate is 5.5%. If you lock your money up for a year, you'll still earn 5.5%. But if you do so for three years, you'll earn 4.75%, and for a five-year CD, that drops to 4.6%. In corporate bonds, you can earn about 6% on a BBB rated bond for one year and 7% on a bond with a three- or five-year maturity, but that goes down to 6.48% for a 10-year maturity. Personally, I would never lock up my money for several years to earn less than 5%. Now, with respect to interest rates, nearly everyone believes they are going to be much lower by the end of this year. I don't. (You can read why I don't expect rates to be meaningfully cut this year in my Annual Forecast Issue of The Oxford Income Letter. Click here for details.) But even if I'm wrong and rates do fall, they won't stay low forever. Look at how drastically rates have climbed recently. Only three years ago, the 10-year Treasury yielded just over 1%. Many investors have anchoring bias. They rely too heavily on previous information even if that information is not accurate or no longer relevant. | 
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