Why bond etfs are bad?

[rajivkumar]

Hello all, I have been researching about bond ETFs recently and I am a little worried regarding the risks of these funds. I realize they are safer than stocks but I have read that they can devalue when interest rates go up and do not have a definite maturity like individual bonds. Have you ever tried this or found another way of investing in bonds with greater safety? Thanks!

 

[Eliza]

No guarantees of principal. When investing in the market, there are no guarantees on your principal, and long-term funds will be hurt more by rising rates than short-term funds will be. If you have to sell when the bond ETF is down, no one will pay you back for the decline.