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Chad Griffith

This week the Federal Reserve made a long-expected move: It raised interest rates. The increase was modest—a quarter point—but more rate hikes may happen next year. For retirement investors, or anyone seeking income from bonds, the rate hike is both good news and bad news. The bad news first: Your bond funds took a hit, falling about 0.8% for the week. (When rates rise, bond prices fall.) This drop follows earlier losses this fall, as investors sold bonds on fears of higher inflation. But over the long term, you’re likely to come out ahead, since you’ll be reinvesting at higher rates. Still, bonds are not going to provide big returns or lofty yields as they once did. So stay focused on the main reason you own fixed income: to cushion the risks of stocks. In bear markets, having that protection in your portfolio can be priceless.

Best wishes,


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“Doubt is not a pleasant condition, but certainty is an absurd one.”

--French writer and philosopher Voltaire