As Markets Are Rattled By The Banking Sector, Experts Recommend Repurchasing Short-Term Bonds

During these times, it would be prudent to seek safety elsewhere if market gyrations and Silicon Valley Bank's failure have shaken your confidence in stock markets.

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The government's subsequent plan to backstop the banking system, as well as the collapse of Silicon Valley Bank and Signature Bank on Monday, appeared to have frightened investors into Treasurys and gold on Monday.

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While some experts caution that you may want to explore safe-haven assets as an alternative to the stock market if you plan to hold investments for a long time, it's important to consider your risk appetite and your time horizon before fleeing to safe assets.

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According to Callie Cox, U.S. investment analyst at social investment network eToro, "Stepping back to assess this situation is extremely important and you have to understand where the economy stands and what can be done about it. You need to understand how long you can hold and what risks you can take right now."

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The stock market is right now about 15% to 20% below record highs, she said, and she believes this will continue.

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Cox noted that bond investing may be the best path for your emotions, but it may not be the best path for your portfolio and your goals.

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Keeping your future goals in mind is also very important if you want to achieve success.

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As a chartered financial analyst and chief investment officer at Life Planning Partners, Tim Utecht noted that this is not the right time to make huge shifts in the way you allocate your assets in terms of your long-term future. "You will need the long-term growth of the equity market for your long-term future", he said.

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Safe places to go

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There is no question that short-term Treasurys are still an attractive investment, particularly because they are backed by the full faith and credit of the United States government, and they can still offer attractive rates.

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As a certified financial planner, Jordan Benold focuses his practice on helping younger investors stay the course. Nevertheless, he suggests T-bills, which are short-term, U.S. Treasury bonds with maturities of less than one year, for those who choose to allocate cash and bonds in the right way.

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He suggests buying, holding, and rolling T-bills until rates start going down. “At some point, these short-term rates will fall, and you can pivot or stay in T-bills. It depends on your individual risk tolerance.”

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Aside from T-bills with a term of 6 months to a year, Utecht recommends certificates of deposit with rates over 4%. In addition to the Federal Deposit Insurance Corp.'s coverage on CDs issued by banks, investors should also be aware of the FDIC's coverage when buying bank CDs. Depositors, banks, and categories of ownership are all insured up to a maximum of $250,000 by the Federal Deposit Insurance Corp.

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“It would be fantastic if you could spread them out among different banks and collect 5% on your money in a period of six to nine months. That would be a great situation to be in," Utecht said.

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Fiduciary Trust Company's Hans Olsen said short-duration, high-quality bonds are the safest investments.

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“In the Treasury market, the short end has been running exceptionally well today. It's interesting to note what's running: It's the short end," Olsen said.