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Edelman Financial Services CEO Ric Edelman on the impact of low interest rates on retirement portfolios and how stocks can help boost retirement plans...
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So -- thinking of retiring anytime soon well yeah might want to hold on to that -- A third of investors a third 33% say low interest rates will cause and to -- -- retirement plans so should yield.
-- -- is chairman and CEO of Edelman financial services he joins me now Rick great to see you it's always.
Take a look at these -- mr.
the yield on the ten year treasury right now one point 66% that down due to basis points.
People out there -- and particularly people who work in retirement at retirements door what do you say to them.
We need to get used to a lower interest rate environment for sometime to come even once the economy begins to recover more strongly and the Fed raises interest rates they're still going to be fairly low 234%.
So people who are relying on fixed income to provide their retirement income needs.
They're going to be disappointed they need to look elsewhere for that income stream.
I want to show folks to chart of the ten year treasury yields the rates.
Where they've gone it's unbelievable you have the spike.
And then this long fall.
And it just continues to today this is spend money that.
Retirees have relied on they've always thought it treasuries being a safe world that's just not anymore is it.
-- what is and we're experiencing Jerry a generational shift in interest rates in 1982.
Interest rates hit their peak around 151617%.
Remember those big fat mortgages back -- of those high rates.
-- ever since the 1980s interest rates have been steadily coming down.
To where they are now virtually zero well this is something that only happens once about every thirty years we're gonna spend the next thirty years -- interest rates going up.
And that means bad news for bomb.
It's bad news for -- -- what do you what do you tell.
People who are right on the threshold of retirement people who might have the biggest bond asset allocation for people who are retired about what they should do right now.
Diversification is the answer instead of loading up on fixed income meaning bank CDs treasury bills double.
They need instead to be far more diversified and that means that ugly word.
Stocks the word everybody is afraid of but in fact stock prices are far lower today than people realize rolled up to corporate profitability.
The yield on stocks is all a lot higher than it is on treasuries and that is not really know what's going to when -- Think about what happened that -- that's a great point that the yield on stocks.
Is is higher the -- fact that accept your point happen here household net worth rose four point 7% to 62 point nine trillion last quarter why.
Stocks were higher.
So it really does there really is a difference to your bottom line if you are diversified right.
People who -- keeping the money entirely in bonds -- are doing it for safety and guess what they're going broke safely.
All right.
Would you talk a little bit about the Baltimore markets we've had some good news we've had some -- days really shot up days.
We've had some really bad down days what do you what's your message for people out there.
If you are -- did you know steel themselves may be calm themselves down.
-- are going to be experiencing another bout of volatility like we did last summer because of what's going on in Europe as well as our -- elections.
And worries about what the whether the Fed will act to the degree that have investors want so.
Volatility is becoming the name of the game we have the last six months of low volatility it was great it was wonderful.
-- but we're -- we're through the eye of the storm the winds are gonna pick -- get used to it don't get scared don't get panicky we've been through this before this too shall pass OK well Rick thanks for coming on it.
Hey I love your new set that's pretty attractive there.
I'm going to like -- tell -- just for Europe.
-- -- a great afternoon thanks for your time appreciate it.
