Will My Bonds Lose Money If The Fed Raises Interest Rates?

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

Ah, I see you must be a bond owner huh? Ok, well if not, then maybe you’re considering buying one of those investments? Still no? Just here to read some stuff on bonds? Hey, it’s totally cool with me. Welcome!

Seems like everyone is wondering if the Fed is going to raise rates or not. I know that I’m sick of hearing about it. Aren’t you? I love all the predictions that I see out in the media. “The Fed will raise rates in September.” “They won’t raise rates in September.’ “There’s a 15% chance they raise rates in December according to (insert whomever has a crystal ball here).” I’ve been seeing all that stuff on the daily for what seems 3 years now.

Here’s what I think. Technically if the Fed raises rates your bond or bond investment may lose value. But, it might not too. Generally speaking when rates rise bond values fall, and vice versa, but that doesn’t mean it’s a guarantee. Lots of things make a bond value rise and fall. The bond issuer can make the price go up and down, so can the economy, so can supply and demand. Tons of stuff.

So with that said, will your bond lose money if the Fed raises rates? I have no idea. I’m not Nostradamus. I don’t have a quatrain about the future of American interest rates. Here’s what I do know: you shouldn’t make decisions on what you THINK might happen. That’s called speculation and speculation isn’t a sustainable investment strategy. I also know that even if the Fed increases rates by 0.25%, which is what everyone on Wall Street expects, rates are still historically low. Like, insultingly low. Have you asked your bank what they’re offering on CD rates lately? The national limbo champion can’t even get that low. So if you’re getting a good rate on your bond and its high quality bond then don’t get all worked up and anxiety ridden about the Fed and the possibility of a rate hike. It will happen sometime, and there’s nothing we can do about that.

I’ve learned to only focus on what you can control.

 

Bonds are subject to credit, market and interest rate risk if sold prior to maturity The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Subscribe To Our Newsletter

Get updates and learn from the best

More To Explore

Investing

Incorrect Comparisons

A few weeks ago, I was on vacation in Indian Rocks Beach, Florida. It was amazing. Thank you to my in-laws for putting it all

My Quote For CNBC Yesterday…..

https://www.cnbc.com/2019/06/24/switching-jobs-dont-make-these-mistakes-with-your-retirement-plan.html

Do You Want To Boost Your Business?

drop us a line and keep in touch

Close Menu