July 31st, 2020
So what can we do with our bonds?
I wanted to share some notes that I wrote on about the perplexing nature of bonds. Depending on your age you most likely to have little to no bonds in growth stages of life and increasing amounts as you approach retirement. Please understand this is not a recommendation to sell all or any of your bonds without some thought and investigation. Note on 1. There are some areas in the fixed income bond arena we feel comfortable with and will squeak out some gains or at least hold value but not sure that is a solution for all of your fixed assets and they need to be monitored. Two final points, I have ran into some pre retirees with less than say 5 years to retirement over the last several months who had almost 90% in. stocks, it has worked out as we really lucked out again rising back so fast, but if you haven't tactically managed this and you just let it ride up until now consider some of these items below as an alternative to your portfolio. Finally all this can only make sense and come together if you are doing comprehensive planning and making sure everything is working together if not please do not attempt to randomly add one of the items below and think it will just fit.
Text version below...
So what can we do with our bonds?
I. Keep 'em... at least some of your bonds. Bonds are
there to preserve your portfolio. You'll need to
figure out what % your comfortable holding, thoughts below
may help you narrow in on this.
2. More Stocks-you sure could buy more stocks, let's make sure the
mix fits your goals and risk level. Also we want to be
aware that stocks are being pushed to expensive
levels because other bond buyers are being pushed
to stocks as well. Always interesting nooks to be exposed however.
3. Structured Notes-they have come a long way
since 08-09' when FDIC insured brand became popular.
They essentially give your investments some buffer of
protection to the downside and have limitations to upside.
They are not perfect and they take some work
but at these levels of stocks and bonds they are, interesting.
4. Annuity - Income or appreciation contracts. Fixed rate annuities are
not great but keep an eye out for rate updates sometimes companies make decent offers. Fixed index however allow us to participate in gains that is not tied to current low rates and are still fixed/ protected from loss which helps our fixed portfolio. If using using for income expect even greater leverage
5, Long term care Protection- If your fixed assets
are going to be dead money for the next few years why
not earmark some of those assets in an Asset Based
long term care solution. Often this solutions provides two
and sometimes up to four or five times the leverage of your
fixed nest egg if used for long term care and if not use you
don't lose it. The return on investment is generally 7- 11% on
you invested dollars which of course higher than we are expecting.
6. Bitcoin- It's interesting, I wrote this as an item
then erased it, then after continued thought put it
back on. As a store of value and not as a get rich scheme
Bitcoin could have a place. Maybe it ends up being l-5% of
your 40% fixed bucket. I'd advise you work with a professional
but don't discount bitcoin all together. I could say the same for-Gold
8/5/2020 10:58:57 pm
John, I appreciate your personal thoughts on these investment matters. Unlike many other investment advisors, these are your own insights rather than the unhelpful, wishy-washy fluff and double talk many other advisors publish.
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