Since December of 2017 bond yields for US Treasuries have moved up substantially. The increase in bond yields is having an impact on the US stock market, as well as markets around the world.
What is driving bond yields higher?
One significant driver is the Tax Cuts passed in December of 2017. The tax cuts are leading to an increase in the budget deficit and the need for additional bond issuance. More bond supply can lead to lower bond valuations and higher bond yields.
Emerging markets have been particularly hurt by the rise in US bond yields. Higher US yields tends to disrupt currency markets and draw investment capital out of emerging markets, like Brazil and Turkey.
The equity markets in the US have been increasing volatile as bond yields have moved higher. This increased volatility has caused many people to reevaluate their investment allocations and wonder what they can do to minimize risk.
Looking at retirement planning is different from investing other assets.
Many people are limited by 2 factors,
(A) the Need for retirement income, and
(B) a limited time horizon.
They need to draw money from their accounts in order to live in the near term.
For savers and retirees, a solution to both of these issues are annuities that provide guaranteed retirement income. These types of annuities create a lifetime guaranteed income stream while giving the investor the ability to stay invested in the market. If the market declines, they will continue to get their stream of income.
By contrast, someone invested in the market without such guarantees, drawing income and experiencing a down draft in the market they may find themselves running out of money during retirement.
This fear, running out of money during retirement, is people’s number one fear according to several recent studies.
If you feel uncomfortable investing in the market at these levels, please reach out to me to discuss options that can help you protect your lifestyle regardless of what happens in the markets.
Retirement Income. Tax Efficient Planning.
Life Insurance. Disability Insurance
Socially Responsible Investing
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This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.
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Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 7 Hanover Square, New York, NY 100034. 888-600-4667. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Devon Financial Partners, LLC is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 2018-61231 exp 6/2020