http://www.starmont.com/2010/03/warning-high-interest-rates-and-high-tax-rates-can-be-dangerous-to-your-wealth/ Just another WordPress weblog Tue, 31 Jan 2012 21:15:48 -0600 http://wordpress.org/?v=2.9.1 hourly 1 http://www.starmont.com/2010/03/warning-high-interest-rates-and-high-tax-rates-can-be-dangerous-to-your-wealth/comment-page-1/#comment-16 harveyrowen Thu, 18 Mar 2010 19:02:23 +0000 http://www.starmont.com/?p=385#comment-16 Yes, sflatt, the value of the bond at maturity would be its face value assuming there is no default by the issuer. The risk is in timing. If the investor needed the money and had to sell the bond before its maturity then the principle would be at risk during rising interest rates or a decline in confidence of the user’s ability to pay. Additionally, the interest rate that the bond earns would be lower than the prevailing rates of return during rising interest rates. Yes, sflatt, the value of the bond at maturity would be its face value assuming there is no default by the issuer. The risk is in timing. If the investor needed the money and had to sell the bond before its maturity then the principle would be at risk during rising interest rates or a decline in confidence of the user’s ability to pay. Additionally, the interest rate that the bond earns would be lower than the prevailing rates of return during rising interest rates.

]]> http://www.starmont.com/2010/03/warning-high-interest-rates-and-high-tax-rates-can-be-dangerous-to-your-wealth/comment-page-1/#comment-13 sflatt Tue, 16 Mar 2010 18:37:09 +0000 http://www.starmont.com/?p=385#comment-13 Please let me know if I am mistaken, BUT, the cases above show losses in the value of a 5 year bond due to rising interest rates or a decline in confidence in the issuer of the bond-----those losses would not exist if the bond holder held the vehicle to full maturity and the municipality or entity still existed. Correct? Please let me know if I am mistaken, BUT, the cases above show losses in the value of a 5 year bond due to rising interest rates or a decline in confidence in the issuer of the bond—–those losses would not exist if the bond holder held the vehicle to full maturity and the municipality or entity still existed. Correct?

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