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Hoots : Is it time to invest in Bonds given the increase in interest rates? Given the ongoing increase in interest rates, the value of bonds will come down. SO, is it time now to invest in bonds? - freshhoot.com

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Is it time to invest in Bonds given the increase in interest rates?
Given the ongoing increase in interest rates, the value of bonds will come down. SO, is it time now to invest in bonds?


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No.

People get this wrong over and over.

If you but a 30 year bond today (3% yield), and rates go to 5%, your bond will be worth 70% of what you paid for it, and your payments will be 60% of what someone buys the 5% bond at later.

You can't sell your bond when rates go to 5% and come out ahead: the reduction in value exactly offsets the benefit.

|Once you buy a 30 year, low-yield bond, you own the results for 30 years.


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