Econintersect: A survey of 1,008 American investors in July by Opinion Research Corporation on behalf of investment broker Edward Jones has some sobering results. More than 60% of investors don’t know how rising interest rates will impact investment portfolios. Apparently some are uncertain rather than totally in the dark because only 24% confessed to that latter condition.
Younger investors had less understanding that older respondents. From the PR Newswire press release:
One-third of respondents between the ages of 18 and 34 replied they have “no idea” how interest rate changes will impact a portfolio. As respondents’ age increased, their level of awareness increased as well with the exception of the oldest age group. One-quarter of those 65 and older also indicated they had “no idea.”
There was little difference in responses based on gender, except for being completely in the dark, where women were more in that status thsan were males. Lower income respondents were almost three times as much in the dark (35%) than were those with incomes over $100,000 (13%).
Edward Jones indicates that investors should look to “ladder’ fixed income investments for proper diversification in a rising rate environment. According to Tom Kersting, Fixed Income Strategist at Edward Jones:
“While it’s hard to know exactly where interest rates will go in the coming weeks and months, we believe over the long-term that rates will continue to rise. Fixed income is still an important part of an overall investment portfolio, but we want to remind investors that now is the time to consider buying shorter- and intermediate-term bonds, rather than just longer-term bonds. Our financial advisors are focused on making sure investors have properly laddered their fixed income investments across various maturities.”
Source:
- Nearly Two-Thirds of Americans are Unaware of How Rising Interest Rates will Impact Investment Portfolios, Edward Jones Survey Finds (PR Newswire press release, 21 August 2013)
