How You can prepare your Portfolio amid rising interest rates.
By The Exchange Team
Many investors worry about rising interest rates and its affect on their portfolio after eight months of market turbulence.
J.P. Morgan Wealth Management says 88% of investors worry about inflation and interest rates, polling more than 2000 investors.
Opt for Value stocks, which trade for less than their value, are preferable over growth stocks, which offer above-average returns.
1. Consider value over growth stocks
Because market interest rates and bond prices move in opposite directions, higher rates cause values to fall.
2. Choose shorter bond maturities.
Advisors evaluate duration while constructing a bond portfolio, which measures a bond's sensitivity to interest rate changes.
Duration is expressed in years and includes the coupon, time to maturity, and yield paid over the tenure.
The longer the period of a bond, the more susceptible it is to interest rate increases and the lower its price.