Vanguard adviser says bond prices may go down, but that shouldn't scare us

Fran Kinniry

When interest rates go up, bond prices go down.

So, with rates at record lows, there's a good chance rates will be heading higher, and bond prices lower, over the next couple of years.

That raises a couple of very important questions for those of us with lots of government and corporate bonds in our 401(k) plans and IRAs.

How worried should we be about the potential losses when the bond bubble bursts? And is there anything we should be doing right now to protect ourselves?

I sought some answers from Fran Kinniry, who knows what it takes to build real financial security. (That's him on the left.)

Kinniry is an investment strategist at The Vanguard Group, the big mutual fund company that manages something like $2 trillion worth of assets for individuals and institutions.

In many ways, his response was reassuring: We shouldn't be losing any sleep over what might happen to bond prices, nor should we be bailing on bonds.

As Kinniry points out, almost anywhere else we might put our money (such as moving it into stocks) would be riskier than sticking with bonds, no matter what might happen.

Take a listen to what he has to say:

Click here for a transcipit of this podcast with Fran Kinniry.

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