The Risks of Rising Interest Rates

03/31/2010 0 comments

March 28, 2010

By Tom Lauricella from The Wall Street Journal

As the economy slowly recovers, the Federal Reserve is inching closer to raising interest rates. Investors should plan ahead to avoid adverse impacts of higher interest rates. First of all, you need to learn the basic knowledge about risks of rising interest rate. This article introduces the concept of duration to help investors to evaluate risks of interest rates.In addition, the author of this article also analysizes the possible impacts of rising interest rate to high-yield bonds, preferred securities and closed-end funds.

With interest rates at extremely low levels, retirees have had to go far afield to boost income from their savings.

But as the economy slowly recovers, the Federal Reserve is inching closer to raising interest rates. Because markets often move in advance of events, now's the time to do a little homework and take inventory of how interest-rate increases could affect your portfolio, especially areas where you may have reached for extra yield.

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