Saturday, February 27, 2010 - 12:40 PM
To Anonymous 219: the value of bonds you hold goes inverse to the rise in interest rates. So, bonds you are holding will become worth less and less as interest rates rise. I wouldn't want to be holding bonds when interest rates start going up. And in a bond fund, as you suggest, you don't even have control over whether to hold the bonds to maturity -- much less is it possible to sell at maturity as all the bonds in the fund will mature on different dates.
But also, you are comparing interest rates of bonds and FDIC-insured CDs. The CDs are not going to lose money -- period. The bonds very well might -- especially if the issuer should go bankrupt in the lousy economy.
370 posts since
Jan 16, 2010
Rep Points: 2,566