Interest rates up; bond prices down … it’s a good thing

Here’s a good tip from


October 29, 2018

NO. 48: RISING INTEREST RATES hurt your bond portfolio’s value—and raise its long-run return. As rates climb, existing bonds drop in price. But thanks to the rise in rates, you can reinvest your interest payments at higher yields, boosting long-run performance. This reinvestment is easy with bond funds—a reason to favor them over individual bonds.

And it works for tax – free municipal bond funds too. And while you reinvest at higher yields you are also accumulating more shares of your fund.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s