Bonds are one of the most misunderstood tools in financial planning. In this Learn About series Troy Sharpe, CFP® talks about how bonds work, what you need to know and how they interact with other tools in your portfolio. According to investopedia.com, A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer. Bond details include the end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments made by the borrower.
The team at OHFG believes the best way to protect your retirement dollars is through a proper asset allocation strategy. Our primary objective as retirement planners is to protect your money!
Asset allocation is the process of spreading your money across various investments to create a portfolio that balances your personal desire for risk and reward.
Asset classes include equities, bonds, annuities, real estate, commodities, private equity and cash.
Each asset class can be divided into several more sub-categories such as Domestic or International, Large or Small, Industry and Sector.
We’ve found that retirement allocations should be broader than what they may have been during the accumulation phase. In retirement, you may have more goals, less time and less ability to go back to work to make up for losses.
Our view is that getting in and out of the market based on whims, projects, and guesses will not protect your money. We believe that allocating your retirement dollars to withstand the level of ups and downs you’re comfortable with from the outset is a better approach.
Some people are comfortable seeing their portfolio fluctuate in value significantly. Others like a smoother ride. If you fall into the latter category, properly allocating your money may be a way to help you feel more secure.
Oak Harvest recommends an allocation model based on the Core4. The Core4 allows us to clearly mark out retirement dollars that may need features like principal protection or guaranteed income, and to put other funds to work in the market for growth.
We work closely with you to determine your proper allocation across each of the Core4. Our aim is to allow you to invest more confidently and sleep better at night.
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