How will rising interest rates impact your portfolio?

The Fed has recently indicated that it might push interest rates up in the summer. The market price of bonds moves inversely (i.e. in opposite direction) as interest rates, thus the value of your bonds might decline. However, the market has already incorporated that possibility. Still, when the Fed actually does pull the trigger, bond prices might dip a bit. But don't try to time the market: if bonds (maybe combined with some stocks) are the best investment match for your goal(s), stick with the bonds. We always knew that they would be a little bit risky, which is why they pay more than your bank account.

Kent Smetters

Kent Smetters is the Boettner Chair Professor at The Wharton School of the University of Pennsylvania, the Interim Faculty Director of the Penn Wharton Public Policy Initiative, and a Faculty Research Fellow at the NBER. He was the former Deputy Assistant Secretary of the U.S. Department of the Treasury, and he subsequently served as a member of the U.S. Congress’ bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring. Kent holds bachelor degrees in Economics and Computer Science from The Ohio State University as well as an MA and PhD in Economics from Harvard University. He previously cofounded a national registered investment advisory firm that built a new technology platform, grew the firm to over 50 advisors and then sold the firm to a large, publicly-traded company. Growing up in a financially poor family, Kent donates his time to “Your Money” to help families work, save and set goals in order to achieve the most in life. Kent is often cited in major news outlets.