Waiting for interest rates to rise before buying bonds may be making a significant mistake

With the Federal Reserve poised to keep interest rates near zero for at least another year, investors should consider purchasing short-term corporate bonds

While cash plays an important role in a well-diversified portfolio, it shouldn’t serve as a proxy for fixed-income securities, notes Collin Martin

Short-term corporate bonds should not replace cash needed for daily liquidity needs or near-term expenses, Martin writes

However, investors with cash earmarked for fixed-income securities are better off buying short-term corporate bonds now than waiting for interest rate hikes to buy Treasury bills

Keeping all of this in mind, the global financial services company has also said that short-term corporate bonds also generate better yields than Treasury bills

Even if the Federal Reserve raises rates to 1% in one year, investing in short-term bonds would still net better returns than investing in Treasury bills when rates rise

The longer the Fed remains on hold, the longer investors sitting in cash may miss out on the higher yields that other investments offer