Welcome to Better Retirement with Kevin Bucher from Citizen Advisory Group where we provide guidance to help you on your retirement journey. Today we are going to discuss strategies on how to deal with a low interest rate environment.
With interest rates low, investors seeking better returns have been driven into riskier strategies at a time of significant uncertainty about the economy. As the economy continues to regain strength the Fed is expected to allow rates to trend higher. But all of that could take several years.
Here are 4 things to consider as you navigate these rough waters:
#1). Keep cash to a minimum
Everyone needs cash. But high-yielding bank accounts now typically pay less than the U.S. inflation rate. Remember, you park money for safety, not to earn interest.
#2). Watch dividends closely
As the economy has struggled, many companies have slashed their dividends to preserve capital. The payouts may eventually be restored but be strategic about which investments to keep for their dividend.
#3). Use stock appreciation to supplement income
With dividends being reduced, consider a “Total Return” approach in regards to getting income from your investments. This involves using an investments appreciation in price in addition to the dividend earnings.
#4). Keep bonds short-term
Diversification isn’t just for stocks and using bonds with shorter maturities can help reduce the risk of losing principal when yields begin to rebound.
If you have any questions on your plan and would like to schedule a complimentary consultation, please call our office at 419-872-0204. For more resources, you can visit our website at CitizenAdvisory.com, find us on facebook at Citizen Advisory Group, and join us each week on NBC24 for Citizen Advisory Group’s Better Retirement.
Learn more at citizenadvisory.com