The Federal Reserve raised interest rates Wednesday, and that will affect your bond holdings.
Though a quarter point increase to the Fed's benchmark rate will not drastically change your returns, a prolonged campaign of rate hikes may be a short-term drag on your fixed income investments, as rising rates mean lower bond prices.
"If you own individual bonds outright, they will continue to pay the stated coupon rate, and mature at par value regardless of price changes," said Amy Hubble, a certified financial planner and principal at Radix Financial in Oklahoma City, Oklahoma. "While it can be frustrating to see losses in traditionally safe investments, it also means fixed income investors will finally be able to reinvest at higher, positive real rates of return."
If you haven't reviewed at your bond portfolio in awhile, here's what you should know: