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Ed Butowsky Explains Why You Should Consider Selling Bonds

Countless investors are unaware that they can easily sell their bonds prior to maturity and secure a profit today … And investors today wonder why their advisers steer clear of any discussions of the sort.

via Ed Butowsky Explains Why You Should Consider Selling Bonds.

Ed Butowsky Explains Why You Should Consider Selling Bonds

Many investors are unaware that they can sell their bonds before maturity and secure a profit today. Most financial advisers, however, typically avoid any conversation about selling bond investments.

Because of the sluggish economy over the last three years, interest rates have dropped to historically low levels. When rate drop, bond prices rise, which is why investors have large unrealized gains on their bond holdings.

Conversely, when interest rates rise, bond prices drop. Interest rates are starting to creep higher, and as they do investors will see these unrealized gains evaporate.

Most bonds are selling above the par value, which is the amount investors receive at maturity. for example, many $100 par value bonds are currently priced between $104 and $110. As the maturity date gets closer though, the value of these bonds will drop toward their par value.

Millions of dollars in profits are currently embedded in interest-rate-sensitive bonds. Savvy investors should consider selling some of their bond holdings and take the profit while they still can.

Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 25 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.