We’ve discussed the “doom and gloom” of a likely recession ahead of us. Companies are laying off tens of thousands of people, the Federal Reserve is increasing interest rates, and according to the media, the world is going to end. Big and small investors, if they’re wise, have been moving their money from the market and parking it on the sidelines, waiting for things to turn around. While a common complaint is a lack of earning potential, it’s better than losing your money in the market. For those of you in this position, there is an opportunity available to you.
Let’s say you have $100,000 sitting in the bank and you want to keep it safe and liquid while still receiving a decent return until you place it back in the stock market. For the last several years, that money has been placed into money market accounts and short-term government bonds, earning nearly nothing in return.
Over the past couple of months, recent developments have occurred, and we have been able to place that money into short-term, high-quality, fixed-income accounts like treasury and corporate bonds. These accounts yield a 4.5-5% return and remain fully liquid. While not as safe as a bank account, they remain fairly stable, and fluctuations are minor (1-2%). If you are willing to trade a portion of your liquidity to set some aside, you could see a 6-8% return over the next several years.
Money currently placed in bonds with no earning potential must be updated and moved. If you have a financial advisor who hasn’t brought this to your attention, consider whether this is the kind of relationship you deserve to have with them. Paying them to advise you while you’re the one bringing ideas to them is unfair to you. The same applies if you do your own investing and haven’t been aware of these new opportunities. You don’t know what you don’t know, and your portfolio will suffer.
Imagine if the script were flipped and your advisor sent you monthly updates and new opportunities rather than you calling your advisor with questions. We have that relationship with our clients because we understand the value it has and how it affects your future. Our job as an advisor is to help maximize the money you’ve spent your entire life saving and use it as a resource to carry you through retirement comfortably. You cannot afford to accept anything less than top-quality service and advice.
The “doom and gloom” is out there, and bad things are happening in the market, but let’s focus on opportunities you can take advantage of to make life better. The environment is ideal to begin putting together income plans if you haven’t already. If you are retired or nearing retirement, protected income is a priority and we’re here to help.
Past performance is not indicative of future results. The material above has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed, and Centennial Advisors, LLC makes no representation or warranty as to the accuracy or completeness of the information, which should not be used as the basis of any investment decision. Information contained on third party websites that Centennial Advisors, LLC may link to are not reviewed in their entirety for accuracy and Centennial Advisors, LLC assumes no liability for the information contained on these websites. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Centennial Advisors, LLC. For more information about Centennial Advisors, LLC, including our Form ADV brochures, please visit https://adviserinfo.sec.govor contact us at 512.265.5000.