Hi,
Many investors are positioned for the last 15 years, not the next few. Bond yields are at multi-decade highs while correction worries are building, and our Certified Financial Planner (CFP) is telling clients what he sees.
If any of these sound like you, it’s worth a look:
- You’re retired, or a few years from retirement, and want steady, lower-risk income
- You’ve kept a low bond allocation since the 2022 drop
- Most of your money is in index funds like VOO or SPY
- You need cash from your investments in the next few years
Here’s what our CFP seeing:
- Bond yields are at multi-decade highs – US yields are up on more supply and less demand, sticky inflation and deficit worries keep pressure on rates, and the Fed is expected to raise rates at least once more (as of now). The government is focused on bringing rates down, so these yields may not last. Locking in around 5% from Treasuries can mean steady income for retirees and a stronger bond base for long-term investors
- Correction worries are building – a handful of big stocks are holding up the market, while 25% of S&P 500 companies are below their 50-day moving average, a technical sign of trouble. Basic portfolios have averaged 13%+ since March 2009, so many hold more risk than they realize. He’s only concerned about clients who aren’t prepared, need cash soon, or have too much risk. For the rest, uncertainty can be an opportunity
- Index funds need active complements – VOO and SPY have averaged above 13% in many investors’ lifetimes, helped by the inflated US deficit. That’s changing as the deficit has to be dealt with, mortgage rates are up, and the world is less interested in the US. International beat the US last year. He likes more international, bonds, and alternatives, with strong active managers around the index core
- Politics – both parties say they’re better for stocks, but the main driver is corporate earnings, not who’s in office. His approach is to ignore short-term hype and build allocations around cash flow needs
The catch is that none of this is a prediction – nobody knows when a correction hits or when yields fall, and you can’t plan for what nobody’s tracking. That’s why we have an in-house, fiduciary Certified Financial Planner who can:
- Stress test your plan against a real correction and tell you plainly whether it holds up
- Build a bond ladder wherever your money sits (Schwab, etc.), from 3 months to 30 years, based on when you need cash
- Set up buckets of different risk around your cash flow needs
- Add international, bond, and alternative exposure around your index portfolio
Reply to this email by Friday and we’ll set up a free 15 minute call with our Certified Financial Planner to go over your situation and see where you stand. Bring your most recent investment statement, and we’ll talk through the next steps from there.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com
This email is simply for illustration purposes and is not intended to provide investment advice.