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Financial Planning / Foolish 401(k)s


Subject:  Re: Bond Funds Date:  9/28/2013  12:24 AM
Author:  W401K Number:  25156 of 25618

Bonds have been on a 30 year bull market. As interest rates fall, bond prices tend to rise and vice versa. We have seen rates go from 13% and higher basically down to zero. The question is how much upside is there in bonds when rates are this low.
The question is when and how quickly do you expect rates to rise. As rates rise, bond prices tend to fall. Think of it this way, If you own a Bond that pays 5% interest, and then interest rates go to 7%, no one will want to buy your bond that only pays 5% because they can get a new one on t