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Discussion Starter #1
Good morning all,

I am trying to find out some information regarding the effect of rising interest rates on the price of a bond fund. My investment knowledge is average to slightly above average, so I know that increasing interest rates lead to bonds being sold at a discount as the seller needs to offer more yield to the purchaser.

I am setting up my allocations for my TFSA and am on the fence if my target allocation should be in the TD eSeries Bond Index Fund or would it be safer to put the money in a HISA? I understand fixed income should be used to mitigate risk of the rest of my portfolio that is in equities, but interest rates are bound to rise eventually and I can't see a bond fund continuing to return the level it has in the past.

Can anyone shine some light on my thinking? Am I correct that Bond Funds will probably start showing losses as interest rates rise? Or am I out in left field? I am not looking to earn a stellar amount on a bond fund, I just want to ensure my capital is preserved.

Thanks all!
 

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Discussion Starter #3
Thanks for the links! That provided the information I needed :).

Now if only we could actually predict what would happen to interest rates in the near term lol
 

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generally, you pick a fund with a duration that matches how long you are able to hold the fund ... this will compensate for a rising rate environment
 

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Depends on your risk tolerance. Your age is usually a big factor. We are all cut from a different cloth.
 
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