By John H. Robinson (Sept 29, 2022)
Inflation is roaring, mortgage rates are soaring, the real estate market and both the stock and bond markets stock are all tumbling – and I have rarely felt more confident in guiding client retirement savings and spending portfolios than I do today.
Rest assured I am neither delusional nor engaged in cannabis stock “due diligence.” The source of my calm comes from the fact that the millions of dollars of client assets that were pulled out of bond mutual funds and held in cash for the past few years have enabled us to avoid the double-digit declines in “conservative” bond funds this year. This cash is now available to take advantage of the dramatic rise in interest rates over the past 9 months. Simply put, it’s a terrible time to be applying for a mortgage but a wonderful time to be buying CDs and treasuries. How wonderful is it to actually earn interest again?
Similarly, I think you all know by now that we prepare clients to expect severe, prolonged downturns in the stock market. At this writing, the stock market qualifies as neither. Temporary declines are only a problem if you need to sell, and we strive to structure portfolios to avoid that unfortunate circumstance.
IMO, consumers who are saving for retirement are being given a golden opportunity to catch up and should hope the stock market declines further and stays down for a while. Meanwhile, many healthy companies that pay rising dividends are looking attractive these days and may offer a powerful tool for retirees to generate passive income and keep up with inflation.
Whenever the investment world gets abnormally turbulent, I am well aware that Fee-Only Planning Hawaii and Financial Planning Hawaii passengers appreciate some reassurance from their financial pilots. Here are links to our latest client communications –
I was Right About Interest Rates! (9/29/2022)
Where to Stash Cash Now (9/29/2022)
Fighting Inflation in Your Portfolio is as Easy as 1-2-3 (9/15/2022)
The Power of Negative Thinking (9/12/2022)
John H. Robinson is the owner/founder of Financial Planning Hawaii, Fee-Only Planning Hawaii, and Paraplanning Hawaii. He is also a co-founder of fintech software-maker Nest Egg Guru.
Securities offered through J.W. Cole Financial, Inc. (JWC) member FINRA/SIPC. Advisory services offered through Financial Planning Hawaii and J.W. Cole Advisors, Inc. (JWCA). Financial Planning Hawaii and JWC/JWCA are unaffiliated entities
Fee-only financial planning services are provided through Financial Planning Hawaii, Inc. DBA Fee-Only Planning Hawaii, a separate state of Hawaii Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client assets nor do its advisers take discretionary authority over client accounts.
The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications