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How to Take Advantage of the Inevitable Rise in Interest Rates

90 views  2013-07-03 00:44   Tagsunderstand  something  interest  blank  several 

Many people are only just now coming to understand something I’ve been warning about for several months: interest ratesare set to rise.

In the month of June, there was a record amount of money pulled out of bond mutual funds and bond exchange-traded funds (ETFs).

According to TrimTabs, a total of $70.8 billion exited bond mutual funds, with an additional $9.0 billion of assets being pulled out of bonds ETFs. That $80.0 billion in total assets being pulled out of the fixed-income asset class was almost twice as large as the pullout that occurred in the fall of 2008, the previous record of monthly outflows. (Source: “Unprecedented $80 Billion Pulled from Bond Funds,” CNBC, July 1, 2013.)

Also Read: NYSE Holidays 2013

Obviously, long-time readers of mine won’t be surprised, since I’ve been recommending adjusting one’s investment strategy to incorporate higher interest rates for several months now.

Even just over a month ago, when 10-year interest rates crossed the two percent barrier, I wrote in the Investment Contrarians article “Why U.S. Treasuries Are Still the Worst Investment” that my analysis had led me to conclude that interest rates were set to continue rising. Even at that time, I was urging readers to incorporate this into their investment strategy.

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