3 ms·

The yield is for new buyers. Your bonds, bought when yield are lower, is worth less.

• mercy_dude 5y ago
  OK, so it could happen if I buy now it would be worth even less due to yields go higher which seems to be the trend.
  • adam_arthur 5y ago
    The market value of a bond will decrease, but the yield at purchase is locked in. But bond funds are different because they are constantly rolling money into new bonds, rather than just buying and holding a given set of bonds.
  • srean 5y ago
    That depends on whether you want to sell your bonds or hold on to them and enjoy the coupon payments. If its the latter the falling price of the bond is not relevant to you. You can still get hurt by inflation, default, changes in tax laws etc. If you have the spare cash, you could buy the older bond issues on the dips induced by rising interest rates. That's a pretty decent strategy because these old bonds are those that are going to mature sooner, lower the time left, less sensitive are their resale value to further interest rate hikes. This leaves you with the option of selling them without much financial harm in case you are in a situation that you have to.