From Our Blog:

INVESTMENT STRATEGY

Were You Comfortable With Your Portfolio’s Volatility Last Year? Are You Looking For a Safer Alternative?

The return of volatility to the market has many investors worrying about the nest egg they have worked long and hard to build, and as the market volatility persists, some find themselves panicking and moving to cash or leaving any cash they have available on the sideline.

With that in mind, you should always carefully consider both your time horizon and risk tolerance before making drastic changes to your portfolio allocation. Simply making an emotional decision can have devastating ramifications on the long-term success of your portfolio.

If you have considered your personal circumstances and still feel as though an ultra-conservative approach is right for you, good news! What if you could invest in an instrument that has minimal principal risk, but also provides more income than the interest from your savings account?

Whether your objective is to put extra cash to work or to sidestep the current market volatility, your portfolio could be invested in an ultra-conservative basket of securities that move very little in price and have a competitive yield (ranging from 2% – 4%) to provide you with extra income.

In More Detail

There are many methods available that act like cash, but also offer interest or dividends as an added bonus. Some of the most easily accessible and familiar examples include:

Let’s take a look these investment vehicles.

Money Market Funds

These mutual funds invest in highly liquid cash and cash equivalents with high credit ratings and offer a very low level of risk. All features of a standard mutual fund apply to money market funds, except that a money market fund is typically always priced at $1 per share, where any excess above the price is distributed to investors in the form of dividends.

Certificates of Deposit

CDs often mature after a specific amount of time (six months, one year, three years, etc.) and can offer better interest rates than savings accounts or money market funds. Generally, a deposit of over $250,000 is FDIC-insured. The disadvantage is that your funds are tied up until the CD matures. If you withdraw early, you could incur penalties.

Short-Term Treasury Bills and Notes

Treasuries are considered one of the safest investments because they are backed by the U.S. government. While they are safe, they also generally yield much lower interest rates (still higher than savings accounts) and longer-term treasuries can lose their value when interest rates go up.

Ultra-Short Bond Funds

These funds can be invested in corporate bonds, municipal bonds, or other types of debt and fixed income, while typically having a maturity of less than two years. They can provide a higher yield than the other options, but can carry slightly more risk, especially with changes in interest rates.

Now What?

Many of our most conservative clients benefit from a portfolio solution that invests in an ultra-conservative basket of income securities. Depending on your time horizon and risk tolerance, this customized income strategy is built for your situation and offers yields between 2% to 4%.

This income solution is built using a mix of Treasury bonds, U.S. government securities, AAA-rated bonds, CDs, and other short term income instruments. Our investment selection centers on the industry’s leading bond managers, striving to invest in high-quality focused funds that provide stability, and consistent levels of income through varying rate environments.

Find Your Risk Number and Invest with Confidence

As always, the first step in making a shift to your portfolio allocation is ensuring the change will still align with your risk tolerance, time horizon, goals, and objectives. Your personalized Risk Number can help you become a fearless investor, preventing you from selling at the bottom and buying back in at the top. Take the five-minute questionnaire today.

Contact us with questions!

What's Your Risk Number?

GET STARTED WITH RISKALYZE

A 5-minute questionnaire covers topics such as portfolio size and top financial goals, while showing real dollar amounts of how much you are willing to risk for potential gains. Once complete, you will have a personalized Risk Number®. It’s fast, free, and displays your number instantly.

small-wooden-boxes
Investor Education
Michael Little

5 “Must Do’s” for your Endowment

Labor Day has passed and school is officially back in session, but in June back to school was already on Michael Little’s mind as he gathered with some of Gross Mendelsohn’s CPAs to discuss “4 Big Financial Challenges Facing Private Schools in 2019.” The group talked about fundraising, endowment management, audits, and strategic planning. Below […]

Read More »
group-of-women
Investor Education
Jennifer Sweeney

5 Reasons Why Women Need to Take Charge of Their Finances

On August 26th we celebrated Women’s Equality Day, making this the perfect time to address women and finances. As roughly half the world’s population, we cannot afford to leave female investors out of the financial conversation. The traditional model of men running the family finances is shifting, as now 96% […]

Read More »
man-holding-interest-rate-sign-with-scissors-cutting
Investor Education
Steven Hannigan

All Eyes on the Fed

Late last year, many prognosticators were predicting the Fed would raise rates several more times in 2019 and interest rates would continue to rise. However, our data-driven process and “investing for all seasons” approach revealed something different – a high likelihood that economic growth would start to slow and interest rates would start to fall. […]

Read More »

1801 Porter Street, Suite 500
Baltimore, MD 21230
410.685.9685

3877 Fairfax Ridge Road, Suite 200N
Fairfax, VA 22030
703.591.7200

Copyright © 2019 GGM Wealth Advisors. All Rights Reserved.

Legal Disclosures | Privacy Policy | Careers