Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

A barbell strategy in bond investing involves holding both short-term and long-term bonds while avoiding intermediate-term bonds. This approach is designed to capitalize on the yield curve's shape, which typically offers higher yields for longer-term bonds compared to short-term ones. By including both ends of the maturity spectrum, investors can benefit from better yield opportunities and manage interest rate risk more effectively.

The short-term bonds offer liquidity and reduced interest rate exposure, while the long-term bonds provide the potential for higher yields and greater returns. The combination allows for a balanced portfolio that can adapt to fluctuations in interest rates, as short-term bonds can be reinvested at higher rates when interest rates rise, while long-term bonds continue to provide income stability.

With this strategy, investors can construct a portfolio that, while having some exposure to the risks of both short and long durations, ultimately aims to achieve an optimal risk-reward profile.