"Baseball Season is Under Way"... For the Most Part
Recently, the Chicago Cubs postponed 5 of their games due to
weather in the city of Chicago. Even the Cubs organization tweeted “Would you
believe us if we said we’re playing baseball today” (April 19th). Unfortunately,
the Cubs schedule was probably created a couple years ago and the organization
cannot consider outside factors like weather. Therefore, when it snows in the
middle of April, the organization must adjust to fulfill their schedule.
We think this goes together with investing. Did you establish a retirement plan in the past? Are events, themes, or concerns in the economy affecting your account and ultimately disrupting your retirement goals? Just like how the Cubs are being proactive throughout the season, you should too when it comes to making changes in your retirement account.
Let’s consider a few examples on how investors should remain
proactive due to outside factors affecting the economy. Recently, the Federal Reserve
raised the fed funds rate by 0.25%. This supports the fact that we are in a
rising interest rate environment. So, what happens to your portfolio when
interest rates go up? Well it depends on the duration (average years) of the
bonds being held in your portfolio.
Did you know when interest rates move higher, the price of
existing bonds go lower. Bonds with higher durations are affected more by
rising interest rates than bonds with lower durations. For example, the price
of a bond with a duration of 5, will hypothetically decrease 5% for every 1%
increase in interest rates. Similarly, the price of a bond with a duration of
2, will hypothetically decrease 2% for every 1% increase in interest rates.
Our point is, if you held longer duration bonds when you
initially set up your retirement account, have you reviewed your retirement
account to protect it from rising interest rates.
Two other events that recently took place were tax reform
and a possible trade war. How will these affect your portfolio? Tax reform
should benefit your portfolio, but which sectors will do better? Large, medium
or small cap companies? What investments or companies should you steer clear
from if a trade war were to occur?
As the Cubs organization reacts to disruptions in their
schedule, you should be prepared to make changes in your portfolio. Griffin
Financial Advisors remains proactive with our clients and their accounts.
Please reach out to us with any questions or concerns in your portfolio.
Have a great weekend!
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Griffin Financial Advisors, LLC. The opinions expressed are those of Griffin Financial Advisors, LLC and are subject to change at any time due to the changes in market or economic conditions.
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