Yields on high-quality bonds are at a 50-year low, and experienced investors, who might have enjoyed 5 to 10 percent yields on AAA bonds in the 1980s and 1990s, are now earning 1 to 3 percent. This has a dramatic impact on retirement income, creating a dilemma for many investors: Should I stay the course and accept the low yields (and the risk of having my bonds called) or look at other strategies to close the income gap?
Some investors have large retirement nest eggs (or current income from other sources) which affords them the flexibility to maintain status quo with their bond investments. Many others, however, are not so fortunate and need to seek higher yields in order to generate enough income to cover monthly expenses. They are forced to change their approach, hoping to earn enough return in alternative assets to offset the loss in yield.
Classic strategies to achieve higher return include increasing stock (equity) exposure; buying high-yield bonds, real estate investment trusts or master limited partnerships; or buying private pensions (single-premium immediate annuities).
Every product or strategy has pros and cons, and four out of these five examples increase investment risk. Buying an annuity is something many investors simply will not entertain given the liquidity constraints of the products.
Investors own bonds for two core reasons: to generate income and provide safety of principal. While high-quality bonds continue to provide safety — acting like an insurance policy in portfolios by providing protection against loss — today’s environment essentially changes the income calculus, decreasing the premium (yield) one receives.
Simply put, the cost of the insurance (bonds) increased, and investors need to think differently about risk profile, yield and protection. Furthermore, advisors who continue to recommend traditional portfolios that predominantly use bonds to buffer equity volatility and who charge fees for this advice might rethink their value proposition. For example, if bonds yield 1.5 percent per year and an advisor charges 0.5 percent for advice, the advisor is earning 33 percent of the return (assuming little to no growth on the bonds over the next five to seven years). Some argue this is not a fair revenue-sharing model.
The ideal investment strategy will vary based on individual income needs and risk profile, but given the current low interest rate, it seems rational for investors to challenge the conventional use of bonds. They should question whether it makes sense to keep or acquire bonds with historically low returns in their portfolios.
Anantara Uluwatu Bali Resort’s acclaimed Anantara Spa incorporates indigenous practices from world traditions, offering signature experiences individually personalized. And now, two renowned healers, experts in holistic, natural approaches to healing mind, body and spirit, join the celebrated Ibu Jero, High Priestess of Balinese Healers, at the spa.
This holiday season, escape to the Caribbean with Celebrity Cruises and reconnect with family and friends in luxurious accommodations that make you feel right at home. Savor globally inspired cuisine designed by our Michelin-starred chef, paired with the most awarded wine collection at sea. Elevate “me time” with a soothing spa treatment sure to renew. With both long and short cruises to celebrate in December, and even three special Ultimate Holiday Cruises that sail over Christmas and into the New Year, the time to gift an experience and create unforgettable memories is now. Celebrity Cruises’ Always IncludedSM pricing — drinks, WiFi and tips — ensures a seamless, carefree vacation with the ones you love.
It’s time to start dreaming of your next trip. Here’s some destination inspiration for you. Take a visual journey through Tulum with us.
While the lure of 10 tasting rooms along the only Urban Bourbon Trail in the United States (and the world) brings almost 19 million visitors to Louisville each year, business and city leaders have plans to grow the city to attract another type of visitor — the sports enthusiast.
Since its prestige for attracting the world elite grew in the 1960s, Greece remains the go-to destination for glittering holidays. Each step of the journey is enrobed in luxury, from culinary traditions with the highest standard of execution and name-brand, high-end shopping to first-rate wellness locales and elite accommodations, like 5-star hotels, private villas and yachts.
This holiday season, award-winning oceanfront hotel Prince Waikiki will partner with Miracle Bar’s Sippin’ Santa, making it the first time the state of Hawai’i has hosted a Miracle Bar pop-up. The hotel will turn its outdoor space into a tiki-themed winter wonderland furnished with both classic and Hawai’ian-inspired holiday decorations. The exclusive holiday cocktail event will be open Dec. 1–31, daily 4–10 p.m.
If you’ve ever dreamt of experiencing the good life of Florence’s great families — but in a modern context — Antica Torre di Via Tournabuoni 1 more than fulfills the requirements. The former private villa in its newly reinvigorated state (completed during the pandemic) offers a full-on Florentine immersion, whether you are traveling on business, pleasure or some mix of both. The location (the physical and cultural center of Florence) and the mid-13th-century building’s conversation-starting pedigree (built by the Guelf-Ruggerini family and owned by the Gianfigliazzi family) are two of the most important selling points. However, it’s what the current management has done to make the property relevant to 21st-century travelers that makes it worth checking into.
The Global Business Travel Association’s (GBTA) Convention 2021 will be unlike any other convention before it, as we come together in person for the first time since the business travel industry drastically changed and look forward to rebuilding and reshaping the future. GBTA Convention 2021 will bring all of us together to learn from experts and each other, in-person at Orange County Convention Center in Orlando, Florida, Nov. 17–19. The safety of our attendees is our top priority. View health and safety protocols.
Research conducted by money.co.uk reveals, out of 40 global cities reviewed, the 10 best cities in the world for art and culture lovers, with four of the top 10 located in the United States. The rankings factored in the number of art galleries, museums, monuments, street art and architecturally notable buildings.