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-- of wealth management of the new economy speaking of -- -- getting ready for retiring and getting your portfolio in order not welcome to the show.
Hey thanks for having me here.
Now all feel with its interest and it -- all the -- we've really been talking about all day the last couple weeks of very -- time in this market has become out of recession.
And people are wondering with all these wild swings in all this uncertainty out there one why do with my portfolio.
You might have some answers for people this time right now this is what you need to do.
Well I think I agree Richard Pryor.
Guess I think you got to take the long term view.
The market is volatile so probably continue to be volatile but here's the themes that we're talking to our clients about and -- three things we're talking about the first -- taxes.
Inflation and even death.
And -- -- a topic of taxes one of the things are -- the clients about is let's look at the portfolio let's make sure you have a good asset allocation strategy.
And is at the time to rebalance the portfolio.
We tend to rebalance our port for client portfolios and an ongoing basis and when you look at the fact that taxes are probably going to be going higher.
Is that it's hard to sort of take some of those weddings and pay at a lower tax rate.
And secondly is it time to look at a Roth -- If taxes are really low is this -- time to do a conversion.
So the long term is still the long term what happens week to week is you know not gonna change the strategy.
And a number one question you really gotta ask yourself as an investor do I think things are better in the next five to ten years and we tend to be optimists we believe in the cap.
-- markets and I gotta tell you norm I don't governor personal finance -- I'm going on fifteen years now.
And the world is entirely different than it was fifteen years ago fifteen years ago you can sit down with your planner.
Asset allocate your portfolio and come back next year you can't do that anymore so how do you define long term is long term Friday.
Or is long term you know once a quarter.
Well I would I've been in the business 25 years and I used to be six to one -- so I'm actually showing you know.
How I've -- I think -- -- -- the fact -- -- matter is this if you go back the last 38 years 38 years.
25 days in the market produce 75% of the return.
So you're right on the one hand it is more volatile.
But at the end of the day we can't move in and out of the market to manage risk and you still have to manage risk through diversification.
And yes you do have to talk to your clients far more frequently.
But what are you gonna tell them if the market takes the purpose did on Thursday are -- gonna say let's go out of Friday comeback kid and then Monday have a rally like this.
Market volatility doesn't make it easier in any stretch the time the market.
And what I think it's house you.
Is we're used to fifteen years ago may be -- two -- three different asset classes.
Today in your portfolio you may have to -- ten or twelve different asset classes and you may have to have a larger allocation to fixed income.
So it is different but you still -- believe the markets producer return over the long run.
No I mean you've handled that very well don't though don't kid yourself now.
I think any people -- say look.
We're gonna see inflation mean it is gonna come to stop might have been actually right at the following year it will be here how -- protect myself run.
Well that's it's a great point you know the interesting thing is if you go back about forty years or so the average inflation rate has been between Ford four and a half percent.
The last two years we've actually had low inflation so dilemma you have is the following.
You have had fixed interest rates that have been below the inflation rate for the last several years so on the one hand you want to be safe.
Because you don't want to risk too much money in the market.
But you've got to meet if you're gonna have any kind of dignified retirement you've got to earn more than four to four and a half percent in your portfolio.
So the thing you got to be careful of and this is what I really get concerned about.
His people are chasing -- They don't like the yields on the short end of the curve.
So they wanna coupon and they go -- longer and longer so the first lesson is if you believe inflation is around the corner or it's always going to be there.
You've got to shorten up on your yields and keep your bond portfolio probably 23 years no longer than that because if inflation -- you want to catch that.
The second thing is you can use a great asset class like tips treasury inflation protected bonds.
Those are bonds that are guaranteed by the US government we still think they're very safe.
And they go up and down based on the CPI each year they're an excellent asset class -- a little trick here to buy individually.
Because -- generations tend to be a long and we normally recommend you buy that in a fond.
But if you shorten up your bonds and if you if you invest in tips you should be fairly well poised that if inflation comes back.
To a higher interest rates to capture those rates.
You know it's been very hard to be a financial planner would zero interest rates need to be a lot easier for us -- we had some yields.
-- would be a lot easier.
DC would stay out of our way no harm no arm -- thank you so much your being let us author of wealth management new economy out Chicago.
And I plan in DC makes the rules up as they go -- apparently you're supposed to figure that out and you know.
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