This week, I’m talking about 5 types of bonds to own now. 

Earlier this week I mentioned that govt issued bonds in Germany are yielding negative .6% at the moment. So if you think rates in the US are low, go over to Deutschland where you’ll get less money back when the bond matures than what you originally purchased the bond for.

But there are places outside the United States and Germany where rates are better, and that’s what I’m talking about today. 

The interest rate environment varies from country to country, and the exchange rate varies from country to country as well, which means there are always opportunities for bond investors if you’re willing to invest outside of the United States. 

So if you’re desperate for more yield, consider investing in foreign bonds where yields are usually higher than here in the US. You have to be very careful about this though. In my opinion, the most prudent way to invest in foreign bonds is through mutual funds and ETFs. You’ll want the diversification that these funds can provide to minimize your risk, and you’ll definitely want to dig a little deeper and make sure that the quality of the bonds are solid.

I’d stick with bonds from the developed world for safety as well. There are plenty of options and right now you can find foreign bonds that will pay you a higher income than what you can get by investing in US bonds exclusively. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about 5 types of bonds to own now. 

Today, I’m talking about building a bond ladder, which is my favorite way to own bonds. It works when rates are going up, down, and sideways, and it helps keep your income from bonds more predictable. Here’s how it works:  I want you to picture a ladder. Each step or rung on the ladder represents one year. The ladder might have 5 rungs or 10 rungs, or somewhere in between. 

So if I build a 5 year bond ladder for a client, I buy bonds of ideally equal dollar amounts that mature next year, the year after that, and so on for 5 years. 

Here’s why I love bond ladders...Bond ladders provide predictable income, because one year of bonds will mature each year, but the other 4 bonds stay invested, so the income tends to be very stable. Bond ladders are generally more liquid too because of their shorter-term nature, and they work great in a rising interest rate environment, because you get to gradually re-invest your bonds at higher rates each year as your bonds mature and cash out, rather than being locked-in for years to come. 

It’s a strategy we’ve used successfully with our clients for decades. I like buying corporate bonds because the yields are higher. You can do this through buying individual corporate bonds or by buying bond ETFs with specific year maturities. I prefer the ETFs because the yields are about the same as individual corporate bonds, but it’s much more diversified. 

That’s it for today. But before you go, you probably know someone who is close to retirement and could benefit from listening to this podcast. If so, please share this podcast with them - just send them a quick text with a screenshot or a link and encourage them to check it out by adding it to their flash briefing in Alexa or subscribing wherever they listen to podcasts! 

Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

----------

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>>> Check out our blog: https://truenorthretirementadvisors.com/blog/

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

Welcome to a new week and a new theme here on the One Minute Retirement Tip! 

This week’s theme is 5 types of bonds to own now. With interest rates so low, you might be frustrated with the low yields and low income you can get these days from bonds. 

Right now, you can get about .28% on a 6 month CD, .84% on a 10year treasury, below 2% on most corporate bonds and even the 30 year treasury is yielding just shy of 1.6%. 

To say rates are low is an understatement. And it’s even worse in other parts of the world - in Germany the 10-year government issued bond is yielding negative! You give them your money to hang on to and rather than them paying you interest, you pay them for the privilege of holding it for you. Makes your head spin, doesn’t it?

But don’t throw out the baby with the bathwater!

Because there are still opportunities that exist for owning bonds today. So this week, I’ll talk about 5 types of bonds that I’ve been buying for my clients to help provide income and stability to their portfolio in order to help you make better decisions when buying bonds in your own portfolio. 

That’s it for today, but before you go...If you haven’t already left a review for the One Minute Retirement Tip, please consider leaving an honest review in Amazon or Apple Podcasts. I read them all, so feel free to leave any feedback or topic suggestions there too. 

Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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>>> Check out our blog: https://truenorthretirementadvisors.com/blog/

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

It’s Sunday, which means...It’s recap time! This week’s theme was why inflation matters in retirement. Inflation, although low right now, can seriously jeopardize your retirement if you don’t understand it, appreciate it, and take steps to minimize its impact on your investment portfolio and your lifestyle in retirement.

Here’s what we covered in each episode this week:

• What is inflation and why it’s so important
• Portfolio Returns Required To Keep Up With Inflation
• Worried About Inflation? Avoid This Mistake In Retirement
• Is Higher Inflation Coming? 
• Bulwarks Against Inflation

My hope is that you come away from this week with a better understanding of this important and often overlooked topic, and how you can avoid the perils of ignoring inflation in retirement. 

Tomorrow, we are starting a brand new theme: 5 types of bonds to own now. With interest rates so low, a lot of investors are frustrated with the low yields and low income on bonds. But don’t throw out the baby with the bathwater! I’ll talk about 5 types of bonds that I’ve been buying for my clients, and opportunities that still exist for bond investors today. 

And if you haven’t already, be sure to check out my YouTube channel - True North Retirement, where I cover a wide variety of retirement planning topics and starting with this week’s video,I’ll be doing a livestream on this week’s topic, which is going live today.  So if you didn’t get enough on inflation this week, be sure to head on over to True North Retirement at 9am pacific/12pm eastern today, when this week’s live stream will be broadcast. 

That’s it for this week! Thanks for listening and I hope you have a blessed Sunday! 

My name is Ashley Micciche and this is the “One Minute Retirement Tip”.

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about why inflation matters in retirement. 

Today, I’m talking about bulwarks against inflation. What can you invest in that will help safeguard your retirement from the harmful effects of inflation? 

• I’ll just start off with the most obvious and well-known protection against inflation - gold and other precious metals. But gold’s ability to protect you against higher inflation is limited, because owning too much gold comes with it’s own set of problems. 
• A better protector against inflation is your stock portfolio. Yes, just by maintaining a meaningful % of stocks in your portfolio, you can protect yourself against inflation, since stock market returns outpace inflation by a wide margin over time. 
• TIPS or Treasury Inflation-Protected Securities are US Govt bonds that have an inflation protection component to them. 
• Real estate is another way to protect against higher inflation, especially if you own income-producing rental properties, because you’ll likely be able to increase rent in an inflationary environment, which will lessen the blow of inflation on your bottom line. 

Lastly, the prospect of higher inflation in retirement should prompt you to get aggressive in paying down your debt, so you’re not stuck with a mortgage, car payments, etc. when the cost of groceries and other necessities go up. The more flexibility you have with your spending in retirement, the less inflation will be a problem for you in retirement.

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

----------

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about why inflation matters in retirement. 

So far this week, we’ve discussed the general problem with inflation in retirement, so today, let’s look at the state of the world today and explore the possibility for higher inflation ahead. 

While I have no immediate concerns about higher inflation ahead, the ever-increasing national debt, and trillions of dollars of fresh stimulus being pumped into the economy because of Covid, higher inflation in the coming years appears more likely. 

In June of this year, an interesting article came out in The Economist. The title of the article: “Don’t worry about inflation—yet”. 

I would tend to agree with this sentiment. Higher inflation is unlikely right now. Businesses (except for the ones selling hand sanitizer) are unlikely to have the power to increase their prices until the economy turns around, so consumer prices are not heading higher anytime soon. 

But the higher our national debt becomes, the fewer options we have to deal with it without higher inflation. When the national debt is high, the government will have higher interest costs and higher payments to its creditors. It needs money to pay these higher interest costs and debt payments, which means it needs higher revenue (i.e. taxes) or it can print money. Too much money floating around in the economy will lead to higher inflation if not managed well. 

So should you worry about inflation right now? Probably not right now. But it would also be unwise to live in denial that higher inflation is ahead. And as I explained earlier this week, even moderate inflation in the 4-5% range can be devastating for your portfolio and your lifestyle in retirement.

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

----------

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about why inflation matters in retirement. 

Yesterday, I talked about how you need to make a 7% return on your investment portfolio just to break even with a 15% tax rate, 3% inflation, and a 4% withdrawal rate. 

Today, I want to take a closer look at that 7% return and how to avoid the mistake that too many people make in retirement. 

Knowing that a 7% return is a good target in retirement to help you keep pace with inflation, taxes, and portfolio withdrawals, let’s look at what your investment portfolio should look like to help you get there. 

A good place to start is to look at what won’t get you there. If you think your money is safe under the mattress, buried in the backyard, or sitting in your bank account, think again. It may be safe as far as it won’t lose any nominal value, but that’s as safe as it goes. If your money isn’t earning at least enough to keep up with taxes and inflation, you are LOSING money in real terms. 

Translated to real dollars, if you’re in the 15% tax bracket, your money needs to be making a 2% rate of return in today’s very low inflation rate environment just to break even. In other words, if you’re not making at least 2% on your money right now, you’re losing money. 

Because interest rates are so low right now, bonds and CDs are also struggling to keep pace. That doesn’t mean that you shouldn’t own bonds - they certainly have their place in a retirement portfolio, but the error many retirees make is having too much in bonds. 

The key is to invest in a portfolio that is capable of earning 7-8% a year, which means that stocks have to be part of that equation, and that’s even more true right now when it’s challenging to earn meaningful returns in cash, CDs and bonds in this current environment. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about why inflation matters in retirement. Today, I’m covering the most important topic of the week - what are the returns you’ll need in retirement to keep up with inflation in retirement. 

If inflation is 3% a year, you’ll need to make 7% on your investments to earn 4%. That’s before taxes. If you’re in the 15% tax bracket in retirement, that cuts your real returns to only 3%. So even at a reasonable level of inflation of only 3%, you’re net returns after taxes and inflation are pretty low. 

And we haven’t even considered portfolio withdrawals you’ll be taking in retirement. So you can see how challenging it is just to break even after inflation, taxes, and portfolio withdrawals and avoid depleting your investment portfolio. 

There are 2 important takeaways from this to understand about how inflation impacts your retirement. First of all, a 7% portfolio return is quite good in retirement. I would be very happy with that over a 20-30 year time period. Many investors earn much less than this in retirement because they have a lot in bonds and cash. That’s why you must be careful to not be too conservatively invested in retirement because it can seriously come back to bite you in retirement. 

Even with this standard base case scenario, you’re still just breaking even. But what if inflation is 4 or 5%? Your real returns drop to the 1-2% range, before withdrawals, so that’s where your purchasing power goes down. Your portfolio returns can’t keep up and you either have to cut back or seriously risk running out of money in retirement. 

And that’s why inflation matters so much in retirement. Because it only takes a slightly elevated inflation to put your retirement in jeopardy. 

Tomorrow I’m going to continue on this topic and discuss how inflation can be devastating in retirement, and we’ll talk more specifically about what you can do to guard your portfolio against the ravages of inflation. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

----------

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about why inflation matters in retirement. 

Today, I’m talking about inflation 101 - what is it and why it matters. 

Inflation, measured by the Consumer Price Index or CPI, is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Inflation is very low right now - with the CPI only increasing about 1-1.5% over the last 12 months according to the Bureau of Labor.

Low inflation is ideal in retirement, because your portfolio returns are better able to keep up with the price increases of groceries, gas, travel, etc., allowing you to maintain your lifestyle over a 20-30 year retirement. 

As inflation goes higher, that means every dollar to your name is now worth less and you need more and more dollars just to stay even and be able to purchase the things you were used to paying less for before. 

You can see the impact of inflation by looking at how much things used to cost compared to how much they cost today. 

In January 1988, a loaf of white bread cost approximately 59¢. In January of 2013, that same loaf of bread cost $1.42. So in the twenty-five year period, the bread increased 83¢ or 140%.

Because that happened slowly over time, you probably aren’t angry about the rising price of bread over the last 25 years, but your income and net worth would have had to also grow by 140% over that same time in order for that loaf of bread to not feel more expensive to you. 

The problem comes in when your income and your net worth doesn’t grow in lockstep with the inevitable price increases due to inflation. That’s why it’s such a massive mistake to put all of your cash in a safe, or under your mattress or bury it in the backyard. If your money isn’t growing at least at the pace of inflation, then you are losing because the value of what every dollar can buy is dropping over time. And that’s why inflation is so dangerous in retirement. Opportunities to increase your income when you’re retired are so limited that higher inflation really takes a toll. 

That’s it for today. But before you go, you probably know someone who is close to retirement and could benefit from listening to this podcast. If so, please share this podcast with them and encourage them to check it out by adding it to their flash briefing in Alexa or subscribing wherever they listen to podcasts! 

Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

Welcome to a new week and a new theme here on the One Minute Retirement Tip! 

This week’s theme is why inflation matters in retirement. Right now, inflation is very low and has been for many years. As time goes on and we go longer and longer without meaningful inflation, Americans become less and less concerned, I think. I rarely have a client who asks me what we should be doing to protect them from inflation, because over the last 20 years, it just hasn’t been something that any of us have had to worry about. In fact, with the Great Recession of 2008-2009, we had the opposite problem - worries about deflation. 

But as I’ll go into depth on this week, inflation can be a big big problem, especially in retirement. If you are unlucky enough to retire during an inflationary time period like the 1970s or 1980s, high inflation is such a problem that it can completely alter your lifestyle in retirement, or worse, cause you to run out of money, just to keep pace with inflation. 

Inflation is problematic anytime, because your dollars don’t go as far as they used to. But when you’re working, wages are usually rising to keep up with inflation. That’s not the case when you’re retired. 

The problem comes in when your income and your net worth doesn’t grow in lockstep with the inevitable price increases due to inflation. If your money isn’t growing at least at the pace of inflation, then you are losing because the value of what every dollar can buy is dropping over time. 

So this week, I’ll talk about why inflation matters for retirement, what kind of investments will help safeguard your assets and your income in an inflationary environment, and what investments you should avoid. I’ll also talk about why I think higher inflation is on the horizon and why the time to prepare for higher inflation is now.

That’s it for today, but before you go...If you haven’t already left a review for the One Minute Retirement Tip, please consider leaving an honest review in Amazon or iTunes. I read them all, so feel free to leave any feedback or topic suggestions there too. 

Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

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>>> Check out our blog: https://truenorthretirementadvisors.com/blog/

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast