Interest rates are rising – but did you know you can benefit from this trend? Fixed-income investments, including CDs, that are issued at higher rates will generate more income. While this may make CDs more attractive, here are three points to keep in mind:
Stocks have performed well over the past few years, and they may represent a larger portion of your portfolio than you intended. You may need to rebalance to the mix of stocks and fixed-income investments that’s right for you. Check with your financial advisor to determine if CDs may be an appropriate solution.
You must evaluate whether a bond or CD ladder and the securities held within it are consistent with your investment objectives, risk tolerance and financial circumstances. Before investing in fixed-income investments, including bonds and CDs, you should understand the risks involved, including credit risk and market risk. Fixed-income investments are also subject to interest rate risk such that when interest rates rise, the prices of these investments can decrease, and the investor can lose principal value if the investment is sold prior to maturity.