First Some Announcements:
Tax review is available. Once you have completed your 2021 taxes, we would like to review them for any additional planning opportunities. Simply upload your 2021 tax return documents at https://ascendinvestment.com/resources/secure-file-upload using the password 40642 to access the page. Then reply to this email and we will get working on them.
Recent Blog Posts include: 11 Quotes about Investing, If America’s in a Recession, Should you Retire?, 4 Yearlong Tax Tips for Retirees, and more. To read visit: AscendInvestment.com/GarrettsGarage
Recent YouTube Videos include: Look Ahead to Next Year’s Taxes, Market Volatility, and more! To watch, click here.
We will be having our annual review time in August through October of this year. We will be reaching out to schedule a time with you. If you would like to meet before that time, please call or reply to this email and let’s schedule a time.
Bond Ladder in Action
Taking income during a market downturn can be scary. Phrases like “What if it doesn’t come back this time?” “Why don’t we take everything to cash to save our income?”
These nervous feelings and fears are real and understandable. Throughout retirement there is the balance of short-term volatility, how much prices move around, and long-term inflation, things cost more. Because of this push and pull we use a bond ladder. Simply put a bond ladder is a series of income buckets.
Each year a bond matures, it pays back the cash amount, which sets up enough cash for the coming year. That way, regardless of what the market is doing, income is ready when needed. The bond ladder, which is different for each account, extends anywhere from one to ten years. (To note: not every account has a bond ladder. A bond ladder is in place if we are taking income from the account or preparing to take income from an account.) We like to think of this in three buckets, where the bond latter sits between cash needs and the volatility of stock prices.
2020 was a great case study for using the bond ladder. At the end of 2019 a bond matured on schedule and moved to cash for 2020. The money was already there even before the COVID-19 pullback happened. The benefits are numerous but here are a few examples.
- We didn’t need to be a “forced seller.” Meaning, we had time to make an educated decision and not one based on a panic sell to provide income.
- We became buyers. Knowing that there was abundant cash ready for income needs, allowed us to look for mispriced companies.
All in all, the bond ladder acted as expected. If you would like to check on yours reply to this email or give us a call.
Garrett G. Smith
Ascend Investment Partners
Paul M. Norman, CFP®
Senior Financial Advisor
Ascend Investment Partners
214 South Main Street
Logan, UT 84321
175 Historic 25th Street
Ogden, UT 84401
Ascend Investment Partners is not a legal or tax advisor. You should consult with your attorney, accountant and/or estate planner before taking any action.
Ascend Investment Partners did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Ascend Investment Partners or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.