Thoughtful Money with Adam Taggart · Sunday, September 27, 2026
Steven Bavaria, founder of The Income Factory, argues that a long-term income investing strategy is actually advantageous when interest rates rise. He explains that while short-term bond prices may decrease, the rising rates lead to higher reinvestment opportunities and ultimately a more favorable income base over time. Bavaria differentiates between short-term and long-term assets, noting that floating-rate instruments reprice immediately, mitigating interest rate risk.
“For the long term, for those of us that are in it for the long term, you know, using an income factory strategy to kind of build our own pensions over time, or if we're closer to retirement, well, we're still building them and we're thinking about using them or, you know, in part. Um, it probably is an advantage for us to have in to have interest rates rise over time.”
“But in the short term, if you were a short-term trader, let's say in the kind of, uh, assets that I tend to own, which you mentioned earlier, short-term, the prices will go down. But longer term, your, the base on which your income is determined is rising.”
“What this means is for our kind of stuff, which would be loans, senior loans and, you know, BDCS, which are just companies that make senior floating rate loans. That, those all reprice immediately when you've got changes in interest rates because they reprice every month or every three months. So you don't have any interest rate risk, any real duration risk with loans and BDCS and anything that does floating rate debt. So it reprices every time.”