Investors fail to realize how rising rates kill bonds: report
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."