I was heavy with equities, so 6 months ago I went to 60/40 stock-bond ratio.
Now everything I read says get out of bonds.
For instance, I have a Vanguard Wellesley Fund - VWINX. Report this week that if interest rates go up 25 points, I lose .6 on the fund. That would be some hurt.
This is exactly it. Matthew25's post history makes me believe his is an educated investor, yet he still is going to get stuck between a rock and a hard place if interest rates rise with any velocity. Obviously if it is a slow and steady rise, things will be relatively normal though.
Seniors need income, and most have followed this path:
Seniors in CDs have either taken it on the chin with the low rates or have "graduated" to bonds or fixed annuities.
Seniors already in bonds and fixed annuities have progressed to high-dividend stocks.
Seniors already in high-dividend stocks have moved on to REITs and limited partnerships.
Seniors already in REITs and LPs are probably bat- shite crazy.
Also, many seniors have been duped into gold and silver as an inflation-hedge or a store of value (I contend that precious metals do neither).
Most of these progressions are fine and dandy if you understand the added risk with each step. Unfortunately, many of them do not, but they have probably seen abnormally high capital gains on these investments nonetheless. These investments have met the income needs of seniors AND provided capital growth. Human nature takes over and they begin to pour in money hand over fist into these new gold mines - pun intended. If/when rates begin to rise, I believe senior investors are going to forget the purpose of those investments - income - and either get hammered on their principal, or we will see a mad rush to the exits in those asset classes. I just hope senior retail investors are not left holding the bag.