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Why You Can’t Hide From Inflation

By Posted on In Investment Strategies, Retirement, Saving, Uncategorized

Just because it isn’t making headlines, doesn’t mean inflation is not a serious issue.  We, as advisors, have to deal with on a daily basis.  The following article is filled with great nuggets about inflation.  Here are my favorites:

“According to the US Labor Department, the median weekly wage back in 1988 was $382… or roughly 18,336 ounces of Coca Cola. Today the median weekly wage is $831.40… or just 6,651.20 ounces.”

“$1 would have bought me 48 ounces of Coca Cola 26 years ago. Today that same dollar buys me just 8 ounces. This means that the dollar has lost 83.3% of its value against Coca Cola over the past three decades, averaging roughly 6.6% inflation per year.”

To read more visit ZeroHedge

Young Savers: How to Retire a Millionaire

By Posted on In Finding Confidence, Retirement, Saving, Uncategorized

I was quoted in an article the other day about what young people can do to begin saving for retirement.  The article outlines a lot of great concepts and analogies:

  • Early Earl and Late Larry, a great chart showing the time value of money
  • A snowball rolling down a hill is like compounding interest where you can earn interest on your interest.

You can read the article here.

Cash Plus: Our Cash Strategy

By Posted on In Cash, Investment Strategies, Saving, Uncategorized

We’ve built a cash strategy for Tier II and Tier III for investors with lots of cash sitting on the sidelines earning next to nothing.

We are recommending a short-term bond portfolio as outlined earlier. It would consist of 5-6 conservative bond investments, reviewed frequently and rebalanced every year. Effort is placed to minimize risk, diversify bond maturities and bond types through a combination of active and passive investments.

Other  features:

Funds can be wired from this account to your bank account in as little as three days.

You can sign up for free check writing privileges from the account.

 

Contact us today if you’re interested in making your cash work harder.

 

Creating a Cash Strategy

By Posted on In Cash, Investment Strategies, Saving, Uncategorized

Your cash strategy should consist of three tiers, with each one having a specific objective:

Tier I: Immediate

Objective: Meets your immediate needs to pay bills and serve as your emergency cash fund.

Products to use: Focus on bank deposits and money market funds

Tier II: Enhanced Cash

Objective: Enhance returns to cash while maintaining liquidity

Products to use: Low duration bonds

Tier III: Return Driver

Objective: Grow cash balance over time

Products to use: Core bonds or actively managed bond funds

The allocation between each of these tiers will depend on several factors – including risk tolerance, goals and spending patterns.

We can help to analyze how much you need for each tier based on your needs. Contact us today if you’re interested in making your cash work harder.

A Step Out On the Risk Curve From Cash

By Posted on In Cash, Investment Strategies, Saving, Uncategorized

Cash and money market funds pay next to nothing but then again you aren’t taking on much risk. If you’re exploring what to do with cash but not ready to go in stocks just yet, the next logical step is to look into short term strategies.  A little extra risk for a little extra potential reward.

Money Market Cash

 

Chart from PIMCO

 

 

Contact us today if you’re interested in making your cash work harder.

 

Analyzing the Pros and Cons of Where to Park Cash

By Posted on In Cash, Saving, Uncategorized

The common options for cash can be complex and confusing.  These tend to be the three most common options:

Bank Deposits

Pros

Stable  and often insured

Easily accessible.

Flexible rates.  They can increase

Cons

Very low rates on deposits.  You’re lucky if you can find anything over 0.50% on bank deposits.

They will most likely stay below the long term inflation rate of 3%.

 

High Yield Savings Accounts

Pros

Typically has higher interest rates than bank deposits. Similar to Money Market funds.

Most likely insured.

Flexible rates that could exceed 3%.

Cons

Minimal customer service. Mostly done online.

Can be difficult to make deposits or withdrawals.

 

Certificates of Deposit

Pro

Better rates than Bank Deposits.

Cons

Subject to early withdrawal penalties.

Subject to interest rate risk.

 

Money Market funds

Pros

Returns may fall somewhere in between rates Bank Deposits and CDs.

No early withdrawal penalty.

Stable value of principal.

Cons

There can be declines in the portfolio.  It’s rare, but still possible.

Not insured.

 

Short Term Bond Strategy

Pros

Potential for better and higher REAL returns. (Real Return is the rate of return when you factor in inflation).

Diversification across multiple sectors and durations to minimize risk.

Cons

The value will fluctuate slightly.

 

Contact us today if you’re interested in making your cash work harder.