If the results of the latest research are any indication, investors are in for a big shock once interest rates start rising and bond prices start falling.

In a survey of U.S. investors, investment firm Edward Jones found that two-thirds of the respondents don't understand how rising interest rates will affect their investment portfolios. Twenty-four per cent admitted they “feel completely in the dark about the potential effects.”

And it gets worse.

One-third of those between the ages of 18 and 34 admitted they have "no idea" how interest rate changes will impact their investments. While the level of awareness increased a bit with age, one-quarter of those 65 and older -- who typically gravitate to the income and perceived safety of bonds -- also indicated they had "no idea."

There's been an appetite among investors, in today's low interest rate environment, to keep more of what are already relatively low yields.

One way to achieve that result is to invest in mutual funds and ETFs that allow an investor to hold a bond portfolio, but enjoy the favourable tax treatment of capital gains. The advantage being that interest income is taxed at your marginal tax rate, while only 50% of capital gains are included in taxable income.

These so-called “advantaged” funds have become extremely popular, so much so that the government is proposing to shut them down, according Finance Misister Flaherty's most recent budget.

Decisions, decisions.

Registered Retirement Savings Plan (RRSP) season is upon us and there are a wide range of investment options available from which to choose.

So how do you plan on making these important investment decisions?

Well, one of the more popular investment choices seems to be mutual funds for RRSPs, according to a new report by BMO Bank of Montreal.

The study revealed that 72 per cent of Canadians say they hold mutual funds within their RRSP, and that mutual funds make up about one-third (31 per cent) of all holdings held in RRSPs.

2013 is the year of the snake (the yin to last year’s dragon yang), and according to www.astrology.com that means “we're likely to see significant developments in the area of science and technology this year.” So if you want to base your investing on the stars that’s your prerogative, but for those looking for more down to earth advice I spoke with David Campbell Lester, a financial life coach and author of the best-selling book I Heart Money.

Do fund managers get better over time? Apparently not, according to recent research by Bryant University professor Jack Trifts.

According to Trifts and colleague Gary Porter, even the best solo fund managers, in the United States at least, falter the longer they stay in the game.

And, while fund companies don't tout star power here as much as they do across the border, there's little reason to suggest that Canada is really much different.

The academics’ other findings are:

• Solo fund managers who survived more than 10 years were likely to have done better or at least matched the market in their first three years;
• Although each of the very best managers generated decent returns following those first three years, the majority were not able to maintain that level of initial performance;
• The longer the best solo fund managers managed a fund, the poorer their average annual performance.