Rising Interest Rates: What Investors Need to Know
Financial adviser Matt Stratman from Western International Securities explains what investors need to know about rising interest rates, including why interest rates rise and fall.
Key Takeaways
- Shift bond holdings from long-term (20-year) to shorter-term (2-5 year) bonds, and consider a laddered bond approach where you purchase bonds maturing at different intervals to capture rising rates as they mature
- Reduce exposure to highly leveraged growth companies and real estate—focus instead on higher-quality stocks with lower debt and companies less sensitive to rate increases
- Consider floating rate bonds tied to inflation or bond indexes, which increase in value as interest rates rise, similar to adjustable-rate mortgages
- Create a strategic plan now rather than reacting emotionally when rates rise; work with a financial advisor to assess how your specific portfolio is positioned for a higher-rate environment
Financial adviser Matt Stratman from Western International Securities explains what investors need to know about rising interest rates, including why interest rates rise and fall.
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