Income fund drops in value
originally posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email asktony@tonynovak.com.
Q: My GNMA and strategic income mutual funds have lost a lot of value over the past year. What can I do?
A: Your funds are designed to produce the highest possible monthly income and are generally referred to as “income funds”. They are not designed to maintain current value or appreciate in value. They will go up and down in value based primarily on changes in prevailing market interest rates but if you hold the funds for the remainder of your life, they are likely to neither gain nor lose value but rather continue generating the monthly income check that was intended. Review your financial situation and goals with OnlineAdviser or another independent and objective financial adviser (not the broker who sold the mutual funds) and if there are no significant changes just leave your funds alone. If appropriate, a shift toward more stock-based investments would help protect you from fluctuations in the interest rate cycle.
Summary
More resources:
http://www.tonynovak.com/onlineadviser.htm