The Q Factor: Bond Gadgets That Could Stop Rising Rates From Kicking Your Assets

Apr 25, 2018

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Episode 218 is the final episode in the April Bond series. We’ve walked through all the benefits and dangers of bonds over the past few weeks. In this episode, we talk about some gadgets that could help you save your portfolio against a couple of evil villains. You’ll want to hear about all the gadgets that will serve you and your portfolio as you plan for your retirement years. Make sure you listen to this episode to hear about all the coolest gadgets that are out there to help you fight rising rates and avoid getting your assets kicked.

Who are the villains in this investing mission?

There are two villains to be fought when planning for retirement. And just like James Bond, you need tools to fight the bad guys. The first villain is inflation. You have to keep up with inflation because it will zap your purchasing power and steal your lifestyle away over time if you let it. Volatility is the second villain. There’s always the chance of losing your money because you were too aggressive in your investments. So where do bonds stand against these bad guys? Well, bonds generally stink at fighting inflation, so they are definitely not the gadget you want for that job. They do a great job at fighting volatility though. If you want to hear about how a few bond gadgets can help you fight off the evil villains listen to this episode of Retirement Answer Man.

There is such a thing as too many gadgets

How subtle do you want your gadgets to be? Think about what the mission is that you’re on with your investing. It’s easy to get caught up in the excitement and potential of certain proposals. When you look at the possibility of returns it can be exciting. However you have to remember that it is a proposal, and proposals are meant to sell you something. All you should care about is whether they can deliver what they promise. You need to investigate further to see if they can actually replicate past results. Listen to this episode to hear about some of the coolest gadgets in the investment world and how you to make sure they are right for you.

What are a few of the gadgets that Q has in store for you?

There are many kinds of gadgets you can use to help battle against rising rates. Lower duration or maturity bond investments can help with volatility. Even foreign bonds can play a role in your portfolio. Different economies are in different economic cycles, so when one goes down the another may be going up. Another gadget you can use is to buy individual bonds rather than a portfolio. These will mature, whereas bonds in a portfolio will never actually mature. These are just a few of the gadgets that a bond investor can use to battle the bond villains. Listen to this episode to hear all of the gadgets that I employ and see if some are a good fit for you.

How gadgety do you want to be?

Think about what you are really trying to accomplish with your bonds before you come up with a strategy to use. Are you looking to be subtle with your gadgets like James Bond, or flashy like Ironman? Before you use any gadgets make sure you understand what you’re getting into. I like to use a fixed and flexible approach to investing and try an maintain 50% passive investments and about 50% using gadgety strategies. Adding complexity to your portfolio can be as easy or as complicated as you make it. Listen to this episode to hear how you can employ some awesome gadgets in your portfolio.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

HOT TOPIC SEGMENT

[4:55] What is the mission that we’re on with our bonds?
[7:22] Who are the villains on this mission?

PRACTICAL PLANNING SEGMENT

[11:29] You can spend so much money on gadgets
[14:44] Lower duration or maturity bond investments can help with volatility
[16:22] Foreign bond can play a role in a diverse portfolio
[20:10] A bond ladder
[22:15] High yield bonds
[26:01] Stable value funds
[27:49] What is a barbell strategy

THE HAPPY LAB SEGMENT

[31:58] Who are the Q’s in your life that help make your life awesome?

TODAY’S SMART SPRINT SEGMENT

[33:42] Look at your asset allocation and see if it’s working for you?

Resources Mentioned In This Episode

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement by Roger Whitney

Ask Roger a question

Work with Roger

3-video Series: 5 Minute Retirement Makeover

Roger’s Retirement Learning Center

The Retirement Answer Man Facebook Page

Intro music by bensound.com