How to Make Money With Rising Interest Rates (5 Steps)

Buy an inverse or short bond fund exchange traded fund (ETF). As interest rates rise, the prices of long bonds will fall to reflect the higher yields. The price of an inverse or short bond ETF like the ProShares Short 20+ year Treasury (TBF) will go up as the price of the bonds goes down, enabling you to profit from the price drops.
Ensure that your savings accounts or other interest bearing bank accounts are all variable-rate accounts, so that the interest rates will rise in line with the market.
Set up a 'bond ladder' with your CD investments. This means that you invest in a series of CDs (certificates of deposit) with different maturities. As each one matures, you reinvest in a slightly longer maturity again, keeping the ladder intact. When interest rates rise, this ensures that you will have CDs maturing soon after the higher rates come in, enabling you to quickly reinvest at preferential rates.
Invest in floating rate notes (FRNs) rather than fixed-rate bonds. These reset their interest rates at set periods, usually every three months, based on a predetermined formula. This is usually a margin over London Interbank offered rate (LIBOR).
Ensure that your equity portfolio is concentrated in sectors that will benefit, or at least not suffer, because of rising rates. These include financials, as banks benefit from the wider spread between the rates charged to borrowers and paid to savers as underlying rates rise. Consumer staples also hold up well in times of rising rates. Demand for products from companies such as Coca-Cola (KO), is stable at such times.
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