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Beginner Investing/Bond & Interest Rates



Does the interest that a bond earns change once a bond investor has purchased a bond?  

For example, if an investor bought a bond earning 6%, would the 6% remain at 6% until the bond is sold?

I thank you for the reply.

   Thanks for the question!

Typically, no.  If  you buy the bond of a company at a particular interest rate, that rate is fixed until maturity. The price of the bond (not the interest rate) will fluctuate as the value of the bond changes.
If you buy a bond fund, then yes, the interest rate you receive will change. A bond fund holds an entire portfolio of bonds, always adding and eliminating bonds. So if rates rise for example, the rate you receive from the find will rise as well. There is a lag, its not perfectly correlated, it depends on how quickly and the exact nature of the funds buying and selling strategy for bonds.

I don't like bonds currently. I do like bond funds, there are some good Exchange Traded Funds (ETFs) like AGG that are general bond funds that track the overall bond markets.   Much less risky than purchasing individual bonds.

Thanks for the question, please do not hesitate to follow up with me if I can offer anything additional.

Best Regards,

Paul Henneman
ValuEngine Inc

Beginner Investing

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Paul Henneman


I can answer any questions on investment strategies. Specifically, my expertise lies in long term investment strategies designed to beat market performance while reducing risk. Not get rich quick schemes, but solid investing strategies. DO NOT SEND ME YOUR HOME WORK QUESTIONS! Over one half of the questions I receive are clearly students in finance or economic classes asking for answers to their homework questions. Most of these come from India. I won't answer them, do your own work. However, I welcome all investors trying to negotiate how to invest in stocks, mutual funds, ETF's, and other investments.


15 years in a leadership role at a financial research company. We sell research to institutions such as Wells Fargo, Fidelity, Thomson Reuters, Bloomberg, Bank of NY, Scotia Bank, and others.

Florida International University, University of Florida

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