WSJ: Bonds Investors At Risk If Interest Rates Rise

Welcome to Tip’d, a social media site for finance, investing, and business topics. Want to participate? » Join Tip’d now! or read our FAQ.

Tip It

WSJ: Bonds Investors At Risk If Interest Rates Rise

Posted by jimmyatkinson 875 days ago, popular 874 days ago (http://online.wsj.com)
Category: Personal Finance | Tags: bonds investing treasurys

When interest rates go up, as in 1994, investors in longer-term bonds can get slaughtered. At today's high prices and low yields, bonds are riskier than they were a few months ago.

6 Comments addto

Save & Share Topple

Spam? Topple this!

Comments Who Tip'd

Comments

longdongsilver 875 days ago

I found this to be quite damning: "The riskiest bonds of all right now are Treasurys. If the economy improves and rates rise, they will get hammered. The longer the bond, the harder the hammering." Hopefully, I have a while before the economy improves and the Fed decides to raise rates. Otherwise, I might want to rethink my current 60-40 bond-to-stock allocation.

BradleyJohnson 874 days ago

If you're going to go with bonds, treasuries are the way to go if you ask me. Most company bond's danger is in bankruptcy. If those companies go bankrupt you will likely lose your money, but if they don't you're unlikely to see the same growth as equities. So basically if the company goes bankrupt a bond is likely as bad as a stock, but if it doesn't the stock is better. In the case of treasuries the company is at least a little less likely to go bankrupt. ;) That doesn't mean you might not get killed in treasuries, I just think I like them better than corporate bonds.

amabaie 875 days ago

60-40 is a very conservative ratio. If we head into a double-dip, it will likely prove wise. If we start to soar, you'll probably kick yourself. Got a crystal ball?

ultrageek 874 days ago

Didn't bonds use to be a safe bet? They were low-interest savings vehicles but generally secure, good for long-term. Doesn't seem so secure, with states going bankrupt.

amabaie 874 days ago

I'm not so sure states will go bankrupt, not in the traditional sense of the word. I still think, relatively speaking, they are a pretty safe bet.

uebersetzung 874 days ago

If it really happens it will constitute a nice stress test for a lot of financial players.

Want to leave a comment on this story? Login or join Tip'd to comment.

A community for financial news, ideas, and tips