Respectfully, that is just not correct.
Imagine you own $1,000 of a 30 year bond that pays 2% interest.
Interest rates go up to 6%.
You could sell your 2% bond and buy a 6% bond. But everyone else could too. So your 2% bond is worth less.
And you’re going to hold it for 30 years, losing out on market interest. That is, you’re getting 2% when the rest of the market is getting 6%.
The loss is there whether you sell or hold to maturity.
Your only decision is do you want to take your loss now in one big sum or take it in small sums over the next 30 years.
Respectfully, that is just not correct.
Imagine you own $1,000 of a 30 year bond that pays 2% interest.
Interest rates go up to 6%.
You could sell your 2% bond and buy a 6% bond. But everyone else could too. So your 2% bond is worth less.
And you’re going to hold it for 30 years, losing out on market interest. That is, you’re getting 2% when the rest of the market is getting 6%.
The loss is there whether you sell or hold to maturity.
Your only decision is do you want to take your loss now in one big sum or take it in small sums over the next 30 years.