Keep Your Bonds Safe with These Six Questions

Keep Your Bonds Safe with These Six Questions

close-up of Federal Reserve seal April 10, 2017 By: Dennis Gogarty

With interest rates on the rise, an association can make sure that its bonds remain safe by asking its investment advisor these six questions about its investment policy statements.

In March, the Federal Reserve raised its benchmark interest rate a quarter percent. This hike came only three months after the Fed’s last rate increase, and the central bank indicated that further increases were likely to come later in 2017. Because bond prices fall when interest rates rise, the bond allocation in a reserve would likely experience capital losses. And this begs the question: How does an association mitigate potential losses in its reserves resulting from rising interest rates?...