So if interest rates start to rise, jump from Bonds?

[JEDI]

Bond rate are inversely proportional to interest rates.

when interest rates drop, Bond returns increase.
and vice versa.

i have 20% of my portfolio in total bond market.

so if interest rates rise, move it over to TIPS (inflation bonds)?

 

[maddogchen]

no clue...but maybe split half and half total bond and tips right now.

 

[DeadByDawn]

Actually bond yields decrease when interest rates drop, but their price goes up. Vice versa when interest rates increase. How much depends on how long their duration is. As long as you hold the bonds as long as the duration is you will not lose out from rising interest rates as the increased yield will make up for the loss in principal.

Go to www.bogleheads.org there are a ton of threads on bonds over there.

edit: and tips are very expensive right now, you are basically buying insurance for unexpected inflation