Over the weekend, a good client of mine sent me a link to a Wall Street Journal article posted back in May that includes an interactive interest rate/bond price calculator.
U.S. interest rates will eventually rise. Interest rates may rise sooner, and much faster, than anyone expects. This calculator is a great tool for every individual company 401(k) retirement plan participant that owns U.S. government bond mutual funds.
I have been an investment advisor for over 32 years. I can count on one hand how many individual investors I have met with that understand what happens to bond mutual fund prices when interest rates rise.
With current U.S. interest rates near all-time lows, any future rise in interest rates will cause a dramatic drop in the value of bond mutual funds.
I watch interest rates and bond mutual fund prices every day. I was shocked at how much U.S. government bonds prices can fall when interest rise even a little from current levels.
The link to the brief article and the tool is listed below.
The World’s Safest Bonds Are Actually Wild Risks
Ric Lager
Lager & Company, Inc.
