I am 62 yo, still working, at least for another 2-1/2 years. My 403B is with American funds with no loads. I have other investments which are in stocks and am looking at the 403B for my bond funds, any recommendations?
Terry Says: Please just remember that bond funds may balance a portfolio but they do not come without risks — even the funds with top-rated bonds. When interest rates rise, bond prices fall. So if you invest say $10,000 even in a U.S. Treasury 10 year bond fund, and if interest rates were to rise by 3 percentage points, that portfolio of bonds would be worth only $7500 if you sell the fund. Of course, bond fund managers are constantly buying new bonds as old ones mature. And the new bonds will carry higher rates as rates move up. So the decline in the price of the fund shares may not be that 25 percent described above. Still, it’s worth knowing that if you need to sell your bond fund, perhaps to take a MRD, you face the potential of loss — not because of default, but because of market moves in bond prices.