This 3rd Week of November 2021 Thoughts
“Gratitude can transform common days into thanksgivings, turn routine jobs into joy, and change ordinary opportunities into blessings.” ~ William Arthur Ward
Inflation is terrible for the bonds you already own…because rising prices hurt fixed payments BUT, good if you have cash to invest at higher yields…which you have. Let this chart sink in…as the orange line is inflation. How much, in general, you can expect the price of things to go up? Along the lines of the broad inflation number: 6%
Whether prices go up or down, whether stocks go up or down, you have a life to live. You have major events to plan for. A wedding, the birth of a child, retirement or starting a business. Today I want us to start looking at 2022…and as we look at the last busy month of this year, we’ll be doing final tax loss selling…to offset ordinary income. We’ll be evaluating how much to convert to your ROTH IRA. We’ll be getting your eMoney financial plan going. We’ll be funding retirement accounts.
This week I’ve attached “Important Numbers for 2022” and this will help you see how much you can convert to your Roth next year…to “fill your bucket.” You’ll see if you can contribute to a Roth IRA…and what increase those on social security will see in January.
So, let the FED be the FED and let inflation do what it will. We have terrific tools and brains to make the most of what financial markets hand out. For this week, as the holidays officially begin, look at what we have to be grateful for, and how we can give back to our community.
If you haven’t received a Risk Tolerance Questionnaire from Totum…look for that email from me. And for those of you who hate filling these out, we’ll work on it together so it will be a little easier.
Required Disclosures: Always read the fine print!
I’ve got good news…and bad news…but let’s focus on the good news! I’ve been writing about bonds lately to help you understand how yields and bonds move in opposite directions. See the purple line below? This is the high-water mark for bond yields is 2021. Each time they hit the 1.65% level, they retreated. Remember, bond yields (the % it pays) and stock prices (the $ value on your Schwab statement) move in opposite directions.
😲 Why does this matter to you? I’m telling you…when / if the 10-year bond yield hits 2%, we’ll be stepping up to buy…the Skye Rising Rate Capsule Portfolio was made for times like this! Most clients have a stockpile of cash to capitalize on rising interest rates…higher inflation. Know this: bonds can be volatile.
Think the market is in a bubble? The market is just a group of investors willing to buy, even at ridiculous prices while there are those who think they are getting a good deal. During bubbles and busts, the value of stocks often don’t match up with the price they have been trading for…but they do tell us a great deal about the current market psychology. Psychological exuberance is often evident during times of irrational exuberance.
😲 Why does this matter to you? There are many investors who are making the case that even if stock market risk has really grown, how can you NOT be in there buying, even at these levels. What matters, then, is your willingness to take on risk: your risk tolerance…and your risk capacity. My goal is to make sure that we are not blindsided by the next market decline and when the Totum Risk Profile hits your inbox, please fill it out and return it. December is going to be a good, busy month!