Posts tagged with "bonds"

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COVID-19 Fed Policy

By Dennis Notchick, CFP

The United States is mired in its worst unemployment since The Great Depression of 90 years ago. Indeed, COVID-19 has stunted our once-robust economy in many ways.

But at the same time, there is this curious occurrence: Equity valuations in the S&P 500 and Nasdaq have hit an all-time high How does that happen with some of the worst economic conditions in our nation’s history?

One of the main reasons: Much of the money dispensed by the Federal Reserve during the pandemic isn’t trickling down to consumers and labor markets, but rather, it’s being reinvested in financial assets, inflating their value. This fresh injection of capital into the money supply can often lead to hyper-inflation for healthcare, housing, and other essential goods that are needed to sustain life. As an example, a recent report from the Employee Benefit Research Institute (EBRI) found a senior couple could need as much $325,000 to have a 90% chance of covering their out-of-pocket costs including Medicare premiums and prescription drugs.

The horrific economic effects of the pandemic have pushed the Federal Reserve to spend trillions of dollars since April in many different ways. They also used the playbook from the Great Financial Crisis and Great Recession of 2008 – low/zero interest rates in the corporate credit market – hoping that these rates would stimulate corporate spending, and in turn, spark employment.

But the forbidding economic environment in which we’re living renders that approach ineffective. Why? Ask yourself: Given the precipitous drop in consumer demand during the pandemic, why would corporations spend to produce goods and services if most customers are more likely to stay home?

So regardless of the amount of money the government prints to subsidize corporate credit markets, little if any corporate spending is on new employment. Instead, many businesses are stashing cash accumulated from government-subsidized bond offerings. This in turn paints a long road back to full employment, essential for the growth of GDP.

What does all of this mean as you are planning for your retirement in the midst of this uncertain time? It means you need to know how to minimize COVID-19’s impact on your retirement savings.

Given these factors, it’s all the more important for those near retirement or in retirement to consider these steps:

  • Update return expectations for bonds. The Federal Reserve has made it clear they will support credit markets with zero interest rate policies to 2022 and beyond.  Most investors in retirement have don’t have all of their assets in stocks, but say 50% stocks and 50% bonds.  If half of the portfolio has a lower return expectation, the total return of the portfolio may not be enough to keep up with inflation and the cost of living. Since many retirees are living well into their 80s and 90s, it’s important to revisit the stock-to-bond ratio to ensure you are giving yourself the best chance to keep up with the ever-rising costs of life over your retirement.
  • Diversify your stock portfolio. Adding new stocks to your portfolio for companies that haven’t been hurt by COVID-19 could help you adjust to market changes. The work-from-home movement was already underway, COVID 19 just accelerated it and there are many companies that are positioned well to take advantage.
  • Plan for higher taxes. With the trillions of dollars of national debt issued this year and moving forward to help stabilize the economy, most tax planners are preparing for higher tax rates in the future. It is critical to take advantage of the low tax rates now to reduce your taxes in the future.  While we can’t control the return of our investments, we can control the taxes.  Perhaps a small tax bill now will keep you from a large tax bill later.
  • Stay invested. Many portfolios got hammered in the first couple of months of the pandemic. But despite the uncertainty and volatility of these times, it’s advisable for pre-retirees to stay invested inequities. Staying invested is usually wise because history shows equity investments will recover in time, however it is more important now than ever to know what you own.
  • Review and re-evaluate. Current circumstances necessitate reviewing your entire retirement plan. Work with your financial advisor to adjust where needed. A job loss or other reasons for less income means you’ll fall behind on the savings rate you expected, and that could mean possibly delaying retirement. Spending less or working longer can help you recover some of the pandemic-related losses. As circumstances change, revisit your plan.

The pandemic may affect or push back the retirement plans you made several years ago, but take comfort in the money you’ve saved and know that you can regain some control of your plan with patience, careful thought, and wise action.

About Dennis Notchick, CFP®

Dennis Notchick, a certified financial planner for Stratos Wealth Advisors (www.dn.stratoswealthadvisors.com), has been serving high net-worth families and business owners since 2008. A certified financial planner since 2010, Notchick has worked with many well-respected firms on Wall Street and provides consulting on investment management, retirement planning, and holistic financial planning. He’s been published or mentioned in numerous online financial publications, including The Wall Street Journal, CNBC, and TheStreet.

Investment advice offered through Stratos Wealth Advisors, LLC, a Registered Investment Advisor. Financial services offered through Stratos Wealth Advisors LLC (“Stratos”), a Registered Investment Advisory Firm. The presentation of these topics is for general information only and is not intended to provide specific advice or recommendations for any individual. The information also does not intend to make an offer or solicitation for the sale or purchase of any product or security. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

Quinoaplex

Quinoaplex, a product made of hydrolyzed quinoa protein that protects hair before and after coloring/bleaching. Quinoaplex resolves the issue of thinning hair, split ends, hair breakage and damages. The reason why quinoaplex works is because h air is made up of 85% protein and as we get older, we expose hair to chemical products and gradually lose this protein. Without enough protein in your hair, you damage it even washing with regular shampoo and conditioner strips it of essential protein . B enefits for Quinoaplex:

-Hydrolyzed quinoa protein (mother of all grains) has the same structure of the protein that is in our hair, naturally. By applying the quinoa protein to the hair, we give it the protein required through the molecules of the organic, natural quinoa protein. Because of the size of the hydrolyzed protein, it enters the bulb where hair is produced, under the scalp, feeding the hair. Therefore, the hair that is produced by the body, grows stronger and reduces hair loss.

-You can carry and travel with the Quinoa Protein (the smaller 1.7oz – and for home 4oz) and spray and quickly massage throughout the day. It will not only provide volume, but also make the hair manageable without gels and sprays, which block the cuticles and increase hair loss.

-Hydrolyzed Quinoa Protein comes in one bottle treatment that supplements the hair from the inside out, with the protein that the hair lacks. Throw it in your gym bag or your purse or travel with it. For more information, please contact me and visit quinoaplex.com

Azuri Technologies X Energise Africa Launch UK Crowd Campaign

Azuri Technologies, a leader in pay-as-you-go solar in Africa and crowdfunding platform Energise Africa today announced the latest phase of debt financing from UK impact investors to deliver affordable, clean energy and help solve the energy crisis in sub-Saharan Africa.

The Azuri and Energise Africa collaboration plans to raise £2.5 million for pay-as-you-go-solar and help more than 100,000 off-grid people in Sub-Saharan Africa access clean, affordable energy.

The investment will support low-income families in Kenya, Nigeria, Uganda, Zambia and Tanzania.

More than 600 million people across Africa live without access to electricity – limiting their life chances of achieving economic prosperity and improved quality of life. Universal access to affordable, reliable and modern energy services is one of the United Nation’s Sustainable Development Goals and can only be met with access to sufficient investment.

Crowdfunding has emerged as a powerful way of financing the off-grid solar industry and is leading the way in increasing investor interest in the market.

Through Energise Africa, individuals in the UK can invest from as little as £50 in bonds, issued by solar businesses, to provide clean and affordable energy access, while targeting annual returns of 6%. Capital is at risk and returns are not guaranteed.

Azuri is a leader in pay-as-you-go solar technology and since 2012 has been supplying affordable solar home systems and products to the millions across Africa living off-grid without access to mains electricity.

In 2018, Azuri and Energise Africa raised £1.7 million from hundreds of UK investors to deliver clean, affordable energy products to more than 16,000 families in sub-Saharan Africa.

Simon Bransfield-Garth, CEO of Azuri said: “Azuri is delighted to extend our partnership with Energise Africa and their community of UK-based retail investors to finance off-grid solar projects. With this innovative financing, thousands more households will be able to access modern solar energy for the first time.”

Lisa Ashford, Managing Director Energise Africa said: “Through Energise Africa, we are committed to providing UK based people with easily accessible opportunities to invest directly in sustainable businesses that can tackle climate change, create long-term social and environmental impact, and also deliver a potential financial return. We’re looking forward to the prospect of working with Azuri Technologies again to help accelerate the achievement of UN SDG 7.

Energise Africa has been developed by Ethex and Lendahand – two of Europe’s leading impact investing companies and is also supported by UK aid, Virgin Unite, Good Energies Foundation and P4G.

Over the past 20 months the Energise Africa community of investors has generated over £7.57 million for 12 solar businesses to provide 312,000 people in 10 African countries with access to clean energy, which has prevented almost 70,000 tonnes of CO2 emissions entering the atmosphere annually and also repaid almost £1.8 million back to investors.

Investing in Energise Africa projects via the www.energiseafrica.co.uk site involves risk, including the loss of all of your invested capital, illiquidity (the inability to sell assets quickly or without substantial loss in value), and it should be done only as part of a diversified portfolio.

The investment opportunities on www.energiseafrica.co.uk are not an offer to the public in any jurisdiction and are available only to registered members of the platform who have certified that they are eligible to invest. Any person who is not resident in the United Kingdom who wishes to view these investment opportunities must first satisfy themselves that they are eligible to do so under the securities laws and regulations applicable to them. This site does not constitute an offer of, or the solicitation of an offer to buy or subscribe for, any securities to any person in any jurisdiction to whom or in which such offer or solicitation would be unlawful.

In respect of its regulated activities, Lendahand Ethex Ltd is an appointed representative of Share In Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 603332).