America's Fastest Growing
Independent Financial Advisory Network
A Nationwide Network of 100% Independent & 100% Objective Fee-Only Financial Advisers
|The-Adviser.com The place to come for answers|
|Interest rates have declined, should I sell my bonds?
By The-Adviser.com -
|New York - Let's
say you are holding 30-year Treasury bonds that mature in five years. The bonds pay 7 1/8
percent and trade at a premium due to the current low interest rate environment. Many
investors are curious as to whether or not they should take the capital gain and invest
the proceeds in new Treasuries. Here is our take.
If you are using the bonds to produce income - you probably should hold the bonds. If you sold the bonds and reinvested the proceeds in new bonds, your income level would decline to whatever the current interest rates are paying.
If you are using the bonds to produce capital gains and you believe interest rates will decline further - you may want to consider selling the bonds and buying bonds that mature longer than five years. This allows you to capture future additional capital gains that would result if interest rates decline.
Bond mutual funds generally have higher investment expenses when compared to an individual bond.
Got an investment question?
Open a professionally managed account:
You don't need to be rich to hire a Financial Adviser. Just Smart
Independent Adviser Corporation is a Registered Investment Adviser that
specializes in helping individuals, families and businesses develop
investment and financial planning strategies.
Do you have a question about your investments?
© Copyright. The Independent Adviser Corporation. All rights reserved. Important Legal Information