Wednesday, March 27, 2013

What Happens to Bonds When Interest Rates Rise?

This  weekend an interesting  article appeard in the  Columbus Dispatch in the business  section. It was  titled "Bond-Lovers still buying despite risk, stock highs." In a recent month investors put $32 Billion into Bond  Mutual Funds.  This becomes a potential issue when interest rates are at all time record lows.  Do  you  think that interest rates one, three  or five years from now will be lower  or higher than  they  are  today?  Can they  get much lower?  Can they get much higher?  Is there  upside interest rate risk?  What happens to  existing values when  rates are rising?  Simple economics answers that question.   Existing prices fall when interest rate rise. The article  further states "With Bond prices rising and interest yields at historic lows the risk has picked up significantly"  The article is  worth  reading!

When customers wish to minimize their risks  Safe Money products might be a logical part of a financial portfolio.  Asset diversification is always very important.

Did you know that there are products that can guarantee lifetime income without any market risk?

I'm not telling anyone  to  buy  something or  to  sell  anything.  I'm just sharing  a nice article worth  reading.

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