Episode #69: Interest Rates Are Rising....Does That Mean You Should Adjust Your Bond Allocation?

The Federal Reserve recently announced that they are going to maintain very low short-term interest rates for bonds over the next couple of years. On the other hand, long-term interest rates seem to be rising in recent weeks. We dedicated this week’s episode to reviewing how a savvy investor may respond to these developments. Throughout the episode, we discuss how bonds work, the risks associated with bonds, interest rates, why bonds are a crucial element of a healthy portfolio, and more. Stay tuned until the end of the episode, where Grant talks about why having non-US-denominated bonds could be beneficial to you.

Show Notes

[01:40] Introduction to Bonds – What bonds are, differences between bonds and stocks, and the role of investment banks in the process of issuing bonds.

[09:56] Risks Associated with Bonds – Grant explains some of the risk factors associated with bonds and why US government bonds are the least risky. 

[13:00] Interest Rates – How the long-term and short-term interest rates work and how the interest rates started to change in the last few weeks.

[17:22] Trends  – Grant shares his take on what contributed to the recent change in interest rates and what the current situation means for investors.

[21:44] Adjusting Bond Holdings – What you should keep in mind when deciding whether it’s a good idea to adjust your bond holdings due to the recent developments.

[24:15] Diversification Effect – Having bonds in your portfolio helps you survive poor market conditions because bonds have a floor on interest rates. Grant shares his take on why this is important for a healthy portfolio.

Resources

Buying Bonds vs. Buying Bond Funds:
abovethecanopy.us/buying-bonds-vs-buying-bond-funds/

7 Ways to Lose Money With Bonds:
abovethecanopy.us/wp-content/uploads/2017/06/7-Ways-to-Lose-Money-With-Bonds.pdf

Episode #60: This Is Why I’m Concerned About Our Rising National Debt:
growmoneybusiness.com/podcast/x9ykf9576e352jd-xs3l5-l355n-pc3nj-4l3tz-fsye7-g9gha-tdcyt-b7r9a-wja6y-ksbz4-9nlgl-559ba-3ncam-2dr43-h4bxz-jnxfw-ae9jc-wl66p-5ss8r-cnaej-4w6y7-pbr3p-dp97g-ar28b-yxwr5-emf3a