First Some Announcements:
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- Proactive Tax Strategies
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- When Should you Bring your Kids into your Financial Lives?
- Value-Based Budgeting – How to get Started
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- Higher Interest on your Savings
- We are starting to see CD rates in the 4% to 5% range! (As of 6/1/2023 - These are not always available and change every day.) If you have additional cash sitting in a checking or savings account earning very little interest, CD rates, money market rates, and bond rates offer a compelling alternative. Give us a call to discuss your situation!
- Would you like us to manage your retirement plan, for example your 401(k), on your behalf? We now have a solution to connect select retirement plan providers. An advantage is comprehensive account management and asset allocation, so all your pieces are working together. If this applies to you, reply to this email, or give us a call and let’s talk!
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Bond Ladder in Action
Taking income during a market volatility 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 over time. 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 your portfolio 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.