Changes in interest rates can be particularly hard on retirees, who favor tax-exempt bonds, CDs and other investments that generate income. For fixed-income securities such as bonds, a rise in interest rates won't result in a loss of monthly income. But rising rates will depress the value of your fixed-income securities if you try to sell them. Many people who fear losing their principal remain mostly invested in fixed income securities. But the cost of missing out on bull markets in other areas of the financial markets can be significant.
Most people assume that safer is better.
Others are just after a fast, high return. Both are risky approaches. If you think you aren't taking risk because you're invested in fixed-income securities, think again. The potential for changes in interest rates can reduce the value of your principal. Also, the assured erosion of your principal by inflation over time is dangerous.