On Apr 6, 8:15 am, "sinister" <sinis...@[EMAIL PROTECTED]
> wrote:
> How can an individual investor hedge against interest rate risk?
Long term interest rates don't vary as much as short-term rates.
> I might buy a house in the next year. My read of the situation is that
home
> prices will decline if rates increase, and the effect will be stronger
in
> tighter, pricier markets with little undeveloped land (like the one I
might
> buy into).
i agree with Peter L., buy as soon as possible. Rates won't move up
until the housing recession is done.
> Are there any ways for an individual investor to hedge against interest
> rates increasing?
Interest rates increases will also cause the stock market to fall, so
you would sell bonds or stocks short or buy puts.
> Yes, I know that the simplest thing for me to do would be not to buy,
but my
> wife's getting impatient with renting. (Also, the risk of home values
> declining isn't so bad if one intends not to move for a long time, but I
> could see that we might move in five years, which normally isn't so bad,
but
> wouldn't be so great if rates increased a 150--200 bp (in terms of
effect on
> sales price of the home we'd buy).)
Start shopping for a house now and after you have looked at 20 places,
you will have a better idea of what's a good buy.
--
Ron
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators
strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM
THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on
the
Newsgroup.
|
