Spread Out Your Wealth
"Bonds are boring."
That's a reason I often hear from folks who don't invest in bonds. And I'm sure, for at least the past year or so, a lot of them felt vindicated...
Bond investors were crushed in 2022 and for most of 2023. But now, they're starting to look attractive because of their high yields.
Spreading out your wealth across assets is an essential part of investing. Bonds offer the safety of modest, predictable yields while balancing out stocks, which provide growth but greater risk.
If you're only invested in stocks right now... beware.
This past Wednesday, my friend Joel Litman – founder of our corporate affiliate Altimetry – warned that stocks are headed for disaster. Right now, every warning sign he sees is flashing red. But instead of panicking, you just need to prepare. And that's by getting into that boring asset – bonds.
Joel has an enviable track record in times of crisis. In the aftermath of the Great Recession, he publicly exposed a list of companies he predicted were doomed for massive losses.
Sure enough, 50 of the 57 companies he named fell in price.
According to Joel, the current looming disaster in stocks will lead to fire-sale opportunities in bonds.
To find out how to position your wealth, click here.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
September 30, 2023
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 'Market Heart Attack' In 2009, Joel Litman warned investors about 57 different companies that were about to go bankrupt – 50 collapsed within days. Now, Litman just stepped forward with another big warning. If you own a single share of stock – much less a business... a mortgage... or a loan of any kind – this will affect you. Find the full story here. | | |
Reader question of the week...
Q: My wife and I purchased I-bonds in April 2022 when the interest rate was attractive. We intend to cash them in, most likely sometime this year, but aren't sure when the interest rate on the bonds we currently hold will drop to a point that it's worth forfeiting the prior three months of interest. Can you clarify this for us? Thank you! – P.W.
A: I originally told readers to buy I-bonds back in March 2022, when these bonds were paying a 7.12% annual rate. At the time, I said...
You're going to earn a healthy, inflation-adjusted return you really can't get anywhere else. If you've got some cash on hand, you can protect your purchasing power and earn a real return in the safest of securities.
Interest rates are announced twice a year – on May 1 and November 1. When the rate changes on your bond depends on when it was issued. But the interest you earn changes over time. Right now, new I-bonds are paying 4.3%.
I can't give individual investment advice. But I can say that when you sell depends on when and why you bought, how much interest you would lose, and whether or not you could earn more in a savings account.
I-bonds pay interest for 30 years. You can cash out after the first year. But if you decide to cash out your bond within the first five years, you'll give up three months of interest. So when you're deciding if it's time to sell, check how much interest you'd lose. Also, check the current rate your bond is paying. You can find all of that on your TreasuryDirect.gov account.
I like the inflation protection and tax benefits that I-bonds offer. In general, there is no state or local income tax on interest earned, although you will have to pay federal income tax. But with high-yield savings accounts paying 4.5% interest, it might be worthwhile for some folks to park money there instead.
Again, you have to determine what's best in your situation based on the factors I've mentioned.
Keep sending your questions, comments, and suggestions our way. We read every e-mail... feedback@healthandwealthbulletin.com.
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