TITLE

Sticker Shock: Fixed-Income Options in a Low-Interest-Rate World

AUTHOR(S)
Opiela, Nancy
PUB. DATE
January 2003
SOURCE
Journal of Financial Planning;Jan2003, Vol. 16 Issue 1, p54
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article reveals the problems facing retirees in the United States who had invested in fixed-income securities and how financial planners could assist them to solve the problems. For those destined to get by on less, is to review the budget and cut spending where possible. The name of the game is loss prevention rather than return. Where to turn, depends on the client's goals and risk tolerance, according to Jack C. Harmon, CFO of Harmon Financial Advisors Inc. For a client who does not care about the value of the account, Harmon would suggest an immediate annuity as the most appropriate vehicle. Clients and planner alike are fielding calls proclaiming the virtues of short-term bond funds. Touting latest investment vehicle seems a trend that will be hopelessly repeated, no matter the fallout. Harmon worries that the most vulnerable clients will be those who develop a case of sticker shock when they go to renew a CD and the rate is two percent, not four or six percent. In counseling clients through this difficult time, it is important to note that the anxiety the clients may be feeling is unprecedented. A weak labor market, the threat of military action in Iraq, and a three-year market decline have combined to erode consumer confidence and darken their outlook for the future. Planners also have their ups and downs to deal with. In terms of positive, planners point to low inflation. Clients are not seeing the income they are used to seeing, but planners need to remember that inflation was 1.6 percent in 2004. It is also noted that low interest rates have sparked an interest in a part of the portfolio in which clients had little interest in the 1990s. INSET: Excess Cash: Mattress or Market?.
ACCESSION #
8841352

 

Related Articles

  • Plan for future income needs.  // Finance Week;11/23/2001, p58 

    Discusses the role of fixed interest investments on the portfolio of retirees in South Africa. Income and capital gains offered by fixed-income markets to investors; Unawareness of the investors on the dangers of fixed interest investments; Option in avoiding the implications of capital gains tax.

  • Better Ladders. Reinhart, Len // Financial Planning;Aug2003, Vol. 33 Issue 8, p33 

    Suggests that money managers could be running laddered fixed-income portfolios for advisers to offer to individual clients with the right pricing. Discussion on fixed-income exchange-traded funds; How to implement a laddered portfolio; Responsibilities of money managers.

  • Fixing Fixed Income. Adler, David // Financial Planning;May2007, Vol. 37 Issue 5, p65 

    The article discusses strategies of financial planners in managing fixed-income (FI) investment of clients. There are opportunities to improve value and yield of FI investments in callable bonds and municipal bonds with solid research and prudent fund management. Michael Brandes, senior FI...

  • KCERA Places Putnam On the Hot Seat. Neel, Dan // Investment Management Weekly;2/16/2004, Vol. 17 Issue 7, p3 

    Reports on the move of Kern County Employees' Retirement Association (KCERA) to investigate Putnam Investments. Reason for the move of the KCERA; Search for a core-plus fixed-income manager to oversee a mandate of an unspecified value in 2003 by KCERA; Managers who were among the finalists as...

  • A Safer Source of Alpha. Roth, Allan S. // Financial Planning;Mar2008, Vol. 38 Issue 3, p103 

    The article discusses a safer market approach for fixed-income investors. The author notes that there is a tendency for financial planners and their clients to seek for an extra 100 to 200 basis points of alpha in fixed-income instruments which yield significant risk-adjusted returns. But, an...

  • Newswatch.  // Financial Planning;Feb2001, Vol. 31 Issue 2, p22 

    Presents news briefs related to the financial services industry in the United States as of February 2001. Details on the proposed fixed-income exchange-traded funds of Nuveen company; Information on the Gramm-Leach-Bliley Act for protecting client privacy; Actions taken by several financial...

  • Stick to Your Guns! Lert, Randy // Financial Planning;Nov2005, Vol. 35 Issue 11, p176 

    Presents the results of quarterly surveys on the marketing approach of investment managers conducted by Russell Investment Group. Decline in large-capital growth stocks; Pattern seen in fixed-income investments; Benefits of diversification to finance companies.

  • Income aim for Britannia Intl bond.  // Money Marketing;10/2/2003, p8 

    Reports that Britannia International is planning a structured product for independent financial advisers. Offer of income plus a full capital return; Market for lower-risk income products; Britannia International's commission for the product.

  • The Politics of Planning. Diehl, John // On Wall Street;Oct2012, Vol. 22 Issue 10, p49 

    The article discusses the active engagement of clients by financial advisors regarding their financial future during an election year. It notes that the election year in the U.S. may well serve as a ground for discussing investment and savings efforts, especially when Americans have signified...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics