Page 6 - Rate Environment News Today

Point in six weeks. >> the rates went up very dramatically. they went up very quickly. >> reporter: ironically an improving economy is to blame. >> unemployment is down. the stock market is doing really well. median home prices are up. people are feeling better. theyre out there buying again. so the economy does well, you will see a rising rate environment. at 3.5% on a $250,000 home with 20% down, you pay about $898. the same 30-year fixed mortgage will coáu you 954 bucks at 4%. thats $56 more...

Again. >> if you are either in the market to buy a house or on the fence about refinancing, i would say, do not wait. >> reporter: mortgage rates are historically low but a sudden move higher, up half a percentage point in six weeks. not the rates went up very dramatically and quickly. >> reporter: ironically an improving economy is to blame. >> unemployment is down. stock market is doing really well. median home price is up, people feeling better, out there buying again. economy does well, you ...

Actually got help. do we want to go this and do a government program, yet again, to prop up housing? why think is. now, if the banks want to sit down and, say, it is good business to take care of our good discussing, to talk with the customers, and help them, but the idea for the government to force banker to change contract, i dont think that is wise. >>neil: and the government is not forcing them to roll become the principle and i can understand that, and they are just say, all right, a lot of...

Can take advantage of the currency fluctuations, they might have corporate bonds, floating bonds and floating rate loans which reset in an upward environment and let your interest rate go up. so it allows you to take advantage of a rising rate environment. what this will allow you to do, if youre in a treasury fund and treasuries are going to go down, you cant do anything. this type of fund and all the fund families have this type of fund and it gives the manager the opportunity to bump out of t...

Bank account or cd or money market, something paying low interest, this is a slightly better insurance policy. >> slightly better if you hold it to maturity, thats true. >> what people at medium risk. what would do you there? >> really, there are a lot of opportunities. we keep hearing how bonds are going to be terrible in a rising rate environment. people are talking most about treasury bonds, perhaps even municipal bonds. if you go to a flexible income fund or strategic income fund, youre goin...

Own a treasury fund and treasuries are going to go down -- >> thats all you can do. >> right. this type of fund and all the major fund families have this kind of a fund and there are different levels of risks. gives the manager to bump into something else and take advantage of a rising rate environment. its a more moderate way to do this. >> lets give hour viewers an example. the concept of having strategic and flexible in the name means exactly just that. it doesnt have to be just in treasuries...

I hear it every day. what people are talking about mostly are traditional treasury bonds and perhaps municipal bonds. if you go to a strategic income fund, youre going to bring in additional opportunities. the investment manager may have treasuries in here. and you could have a spot where when quantitative easing ends at the end of june -- >> quantitative easing is this throwing money into the economy to keep interest rates low. >> thats right. >> and thooets thats going to end. >> at the end of...

Unfamiliar with investing prior to the last 30 years. theyre unfamiliar with what do you do when rates go up. if we are in that environment, if inflation picks up, a low-risk way to do this would be to look at t.i.p.s. the idea is you get a low interest rate but every year it bumps the principal up by the rate of inflation. if only problem is if you need income from it, its not going to provide a lot of annual income. >> all that matters is your capital is not losing value because of inflation. ...

The right questions, whats the exchange rate, how do you mail in, sech the funds. can i do it in a responsible and safe way. >> so do a lot of checking first before you make any moves. all right. our next question is from craig in delaware. he writes, im 43 and have $350,000 in my 401(k). the account is 90% stocks and 10% bonds. i know a more appropriate mix for my age would be 70/30. but isnt this an awful time to move that much money to bonds with interest rates so low and high bond prices? sh...

Do it and need to do it now. dont just pick the bond fund thats in there. find the type of bonds, get on the internet and look for bonds that do well in a rising rate environment or fixed account that can change rates in an upward fashion and youll do very well. >> i think someone like craig knows the ratio should not have a hard time doing the research. thanks for helping us out today. if you have a question you want answered, were heapiappy to he you out. i got into one of the best schools in ...