Rates Are Rising. Is It Time to Sell Your Bonds?

With interest rates still close to historic lows there has been lots of talk about how rising interest rates will reduce bond values. This hasn't been helped by President Trump's trade war threats, which have the potential of causing rising prices and higher inflation.

The Federal Reserve has raised rates six times in the past three years. Even though rates are rising, there are still many reasons to hold bonds. One of the most important is that a portfolio that includes bonds will help investors weather the storms of the stock market and keep them invested, rather than selling when stocks drop. If you don't stay invested in stocks, it is unlikely that you will keep pace with inflation, which could jeopardize your reaching your financial goals. In fact, if the recent market volatility made you a little jittery, you may actually want to increase your bond exposure now, rather than reduce it.

Making a Case for Bonds

Let's start by examining the reason you added bonds to your portfolio in the first place. The main reason to buy bonds is to have an asset that hopefully grows