Mutual Funds/when raise interest rates
I'm invested in several mutual funds, 60% of my portfolio. Whenever the feds decide to raise the interest rates (last I heard was mid-2015), will the value of my portfolio take a huge hit and drop like it did in 2008, or close to that? Thanks
When interest rates rise, your portfolio will certainly not benefit. Your bonds will lose value--because new bonds will pay more. Your stocks will also probably lose value: Bonds will start looking more desirable than they have been.
If the rise in interest rates is slow and modest, the damage will also be modest. Especially if you own shorter-term bonds--not long-term bonds As for your stocks, those that pay dividends may begin raising their payouts--so all will be right again. And if interest rates don't rise too high and too fast, the economy won't be badly hurt.
In short, you might worry a little bit. But if you have kept your bond' duration fairly short, and if you have patience with regard to your stocks, you'll be okay.