Dear Ms. Savage,
I am writing concerning your article on bonds a few weeks ago. We are retired and have some index bond funds, which we would only sell to rebalance. The dividends are our main concern. So, if the interest rate rises could we actually receive as much or more dividends than we get today even though the value of the fund goes down?
Terry Says: Yes, you would continue to receive the income (as long as the bonds inside the fund don’t default) — but the value of the fund shares would drop as rates rise. And you might be a bit dissatisfied with the income stream compared to new funds that hold bonds with higher rates.