Interest_Rates

Interest_Rates - The Risks of Rising Interest Rates by Tom...

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The Risks of Rising Interest Rates by Tom Lauricella Wednesday, March 31, 2010 provided by 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. On the plus side, higher short-term interest rates will provide relief to savers earning a measly 0.03% on money-market funds or less than 2% on short-term U.S. Treasurys. The downside is that higher rates mean lower bond prices and potential losses for investors who bought bonds funds in the past year. Just last week, the iShares Barclays 20+ Year Treasury Bond Fund (TLT), which has been yielding around 4.5%, lost roughly 3% of its value in three days. But losses could show up in less obvious places, such as preferred stocks. Many investors "have more interest-rate risk than they probably realize and in places they don't realize," says Lawrence Glazer, a financial adviser at Mayflower Advisors in Boston. Gauging the risks posed by rising rates isn't an easy task
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Interest_Rates - The Risks of Rising Interest Rates by Tom...

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