! How Interest Rate Changes Affect the Price of Bonds


Jim from IL posted over 5 years ago:


Charles from IL posted over 5 years ago:

Jim, most bonds pay a fixed amount of interest, so the interest payments you receive aren't affected by the bond price. Yield, which calculates the interest payment in relation to the bond's price, does change, but not the actual interest payment made. -Charles Rotblut, AAII

Edward from VA posted over 5 years ago:

when interest rate start to rise:
How safe are the following:
Gnma bond funds
inflation- protected bonds in a bond fund
total bond market index fund

Ron Scheurer from OH posted over 3 years ago:

Hey Edward or others,

My experience with GNMA funds is that they are coupon clippers and don't move much with interest rate changes.
Also you need a point of reference when buying bond funds. The statement to avoid zero coupon bonds is not always true. Bought some in the mid 70's yielding 12% to maturity and that turned into a great investment.
As for tips and index bond funds you want to acquire when they are discounted and not pay a premium.

Sanford Levey from MA posted over 2 years ago:

I believe GNMA'S are tied to mortgage rates.This being the case,when rates are low ,such has been true the last few years,folks will re-mortgage to a lower rate.This doesn't 'bode well for GNMA's.At this point with rates going up,
Re -mortgaging is not so attractive,so it tends to help GNMA's.

Dhiraj Shah from TX posted about 1 year ago:

How preffered etfs are affected by changes in interest rate?

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