Since the Fed announced its intentions to wrap up QE faster than most expected, markets have driven bond yields significantly higher. Without looking it up, can you guess what will happen to bond prices?
I looked up your published polls and decided to start following you. I know squat about investing so I'm hoping to learn something, don't let me down ;)
Thanks, I'll try!
So that's good news for the bond funds I have?
That depends. What interest rate did you buy them at and when do they mature?
No. The face value of the bond will decrease. You will receive the same amount of money as monthly payment. But if you sell, you will get less $. Unless you wait until maturity.
Bond FUNDS, not individual bonds.
Depends on what bonds the fund have on it. If the fund managers where smart enough to anticipate this, it could be good news.
Do this funds pay you rent?
A good manager can keep duration down so the fund isn't as responsive to a change in interest rates. Most people in the business community saw this coming, so a good bond manager would have made preparations years in advance.
For a few time now the consensus was to buy bonds that will mature soon. If your Fund did this, then bonds will be paid at face value (full price). And now, they can start buying bonds at a discount price and higher yield.
Decrease. It's called the inverse relationship between bond yields and bond prices. For bonds, yields and prices always move in opposite directions. It's a very basic principle that many people who have bonds in their portfolio don't know.
But nobody change your answer. I want to see the results.