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But their relationship with changing interest rates can make them more problematic than some investors might understand.
How Do Bonds and Interest Rates Interact?
Bonds and interest rates have an inverse relationship.
When interest rates rise, bond prices fall, and vice versa.
How Do Fed Rate Cuts Affect Bonds?
Although the Fed doesnt directly control market interest rates, it does dictate the federal funds rate.
This is the rate that banks charge one another for overnight loans.
This should help prop up bond prices.
How Have Bonds Performed in 2024?
Markets are forward-looking instruments.
This means they often make moves ahead of the actual events that affect them.
Is This a Good Time To Buy Bonds for Your Retirement Portfolio?
In fact, it might be a great time.
One popular strategy that helps negate the factor of changing interest rates is building a bond ladder.
This involves buying bonds that mature every year for a set period, such as 10 years.
