It seems that scary bond market articles are popping up all over my daily financial reading sites. I wanted to comment on one of the best ones that I have read lately below.
This article is especially frightening. The author provides actual potential percentage loss amounts for bond mutual funds after a rise in interest rates. The title is “How Bad Could Bond Market Losses Get?”
The rise in U.S. interest rates shows no sign of letting up. And this rise takes place even before the next U.S. Federal Reserve Board meeting on December 13th and 14th.
Individual company 401(k) retirement plan participants really need to watch their bond mutual fund investments now. Know exactly that type and average maturity of bonds that your company 401(k) bond mutual fund currently owns.
Especially dangerous now are the target date mutual funds that have taken over default company 401(k) retirement plan menus. Those mutual funds are not “set-it-and-forget-it” stock or bond market investments.
Target date mutual fund owners are going to get their stock market education at a later date. It seems that the U.S. bond markets are going to provide the interest rate part of target date mutual fund owner’s education a bit sooner.
Ric Lager
Lager & Company, Inc.
