“I understand that bonds prices go down when interest rates go up and vice versa. That said, should I still be holding bonds in my portfolio?”
We hear this question in almost all client meetings. Investors are conditioned to believe that bonds are only good in falling interest rate environments. With all the talk about interest rates set to rise, it only makes sense that clients ask if they should get out of their bond positions to avoid losses in their portfolios.
I ask the following question, should a client suggest a change in their asset allocation — “have your long-term plans suddenly changed?” If the answer is no, then we have a longer discussion about why they are feeling this way. 9 times out of 10, the conversation is dropped and clients leave the meeting feeling more secure in their asset allocation.
The following article by Jim Parker, addresses why bonds are a necessity in most clients’ portfolios and why interest rate speculation should not dictate how your portfolio is allocated.
Speak to one of our financial planning advisors today, to see if this strategy makes sense for you.