One strategy is to invest in short-term bonds or bond ETFs. Short-term bonds typically have lower interest rate risk than longer-term bonds because they have a shorter maturity period.
Bond ETFs can provide exposure to a diversified portfolio of bonds and can be more liquid than individual bonds.
Another strategy is to invest in Treasury Inflation-Protected Securities (TIPS). TIPS bonds are intended to shield investors from inflation.
They provide a fixed interest rate, but the principal value adjusts with inflation. TIPS can be a good investment during periods of rising inflation and rising interest rates.
Another approach to wager on higher interest rates is by shorting bonds or bond ETFs. Bond prices often decrease when interest rates increase.
Short-selling involves borrowing bonds and selling them in the hopes of buying them back at a lower price in the future.
This strategy can be risky because if the bond prices rise instead of falling, the short-seller can suffer losses.
Investing in bank stocks can be a way to profit from rising interest rates.