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By Jason Stipp | 04-29-2010 10:01 AM

Coping Strategies for a Low-Yield Environment

Morningstar's Christine Benz offers tips for yield-seekers in today's environment, plus some products you may want to wait on.

Jason Stipp: I'm Jason Stipp for Morningstar. It's very hard to cope with this low-yield environment, but one of the things that investors can do is steer clear of pitfalls and avoid making it worse for themselves. Here with me to offer some tips is Morningstar's Christine Benz. She's Director of Personal Finance for Thanks for joining me, Christine.

Christine Benz: Jason, it's great to be here.

Stipp: So, it really hurts, this low-yield environment, we've been hearing from a lot of readers. And there's not a lot of great options, but one thing you can do is avoid making mistakes. So what are some of the major pitfalls that people might fall into as they're trying to deal with this low-yield environment?

Benz: Well, one thing we've been seeing, and thinking a lot about recently, is that we've seen this torrent of assets going into bond funds. And my concern is that what you've got there are some people who are fed up with the low yields they're earning on their cash, so their CDs, and their money market funds, and so forth. So they're thinking, I'll just step out there a little bit on the risk spectrum, look at a short-term bond, ultra-short-term bond, or maybe even an intermediate-term bond, and then I may be able to pick up a couple of percentage points of yield.

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