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#359 - Bond Boot Camp: What They Are and How They Work
A new year, a new website and the questions are pouring in!
First up this week was Tom from New Hampshire who is looking to get his financial life in order. It wasn't too long ago that it went a bit off track but with a new year, Tom has some benchmarks he's looking to meet and wanted to run them by us. Next up was Erin in New Mexico who is going through a divorce and wants to make sure she's properly protecting herself. We finished up hour one by answering a handful of email questions.
On to hour two...
What’s a portfolio without a bond position? It’s incomplete and potentially riskier than necessary.
We field so many questions about your portfolios and asset allocation and while stocks may seem sexier because of their upside potential, you always hear me stress that everyone needs exposure to bonds as well.
We rarely dive into bonds in great detail--what they are, how they work, and why you absolutely need them, which is why I thought it would be time for a little Bond Boot Camp. Our leader for this mission on today’s show is Justin Land, aka the ultimate bond guru.
Justin is the Director of Tax Exempt Portfolio Management at Wasmer, Schroeder & Company, an investment advisory firm based in Naples, FL.
In the current environment where it seems like the Dow is setting records on a daily basis, there’s probably a lot of people out there who want to be 100% invested in stocks. But what happens when the Bull turns into a Bear -- what will help protect you then?
What if I told you that by owning a bond position, you’d only miss out on a little of the upside, but in return, your downside would look far better when that eventual correction occurs.
And make no mistake...it’s coming. It’s a matter of when, not if.
After hearing this chat with the bond guru, if you don’t already, I hope you add some to your portfolio and start out 2018 on the right financial foot!
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#250 Fed Rate Hike, Divorce Planning
What a big show...just in time for #250, the Fed raised short-term interest rates for the first time in nearly a decade; Congress voted on a budget, which extended and made permanent a bunch of tax deals; and guest Jane MacAuliffe of Forbes Financial Planning outlined important financial decisions associated with divorce.
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Now that we have lift off, how long will the journey last? As expected, the Federal Reserve raised rates by 0.25 percent. While the economy is far from perfect, officials noted that activity has been strong enough to strengthen the labor market, foster consumer spending, and prompt business investment.
The big question for investors is whether the Fed will be able to gradually increase rates over the next few years, as the officials themselves predict, or will changing economic conditions force either a slower or quicker pace. The next big question: When will savers benefit from the rate hike? Unfortunately for consumers, while the nation’s big banks chose to immediately increase their prime lending rates, most chose NOT to increase deposit rates on savings accounts. That means that beleaguered savers will have to wait until next year to see a bump up in their income.
Jane McAuliffe is pursuing the Certified Divorce Financial Analyst Certification (CDFA) to help clients achieve an equitable outcome during the divorce process. She helped us understand the various reasons why such a niche exists and how she provides much-needed advice during the emotional rollercoaster of a divorce.
Thanks to everyone who participated this week, especially Mark, the Best Producer in the World. Sadly, Mark did not appear on the show in honor of #250...we may need to wait until #300! Here's how to contact us:
- Call 855-411-JILL and we'll schedule time to get you on the show LIVE
- Send an email: askjill@jillonmoney.com
- Tweet us: @jillonmoney and @MTalercio