What’s in the news:
Last Tuesday the Federal Reserve Board released a list of the top 33 Nations that own US Treasury Securities, which include Treasury Bills, Notes, and Bonds as well as TIPS. It is not surprising that China and Japan were the two biggest holders of US Treasury debt, about one-third of the total foreign investment. In total, foreign investors hold $6.21 trillion in US government debt, which is more than twice as much as in 2008. In recent years we have seen low and below zero yields in global markets around the world, therefore it makes sense to invest in what is regarded as the safest asset on the planet. A country like China also has few alternatives to invest its approximately $3.1 trillion in currency reserves.
There are always concerns and talks when this report is updated and released and everyone sees the amount of American debt that China holds. What would happen if China decides to dump their US Treasuries out on the market? While highly unlikely, a sell off of bond holdings would reduce the value of outstanding treasuries. Trade negotiations and tariff talks also have the potential for increasing friction along with any type of geopolitical risk. Aside from any exogenous shocks, the US economy still is in a much better place than it was several years ago.
What we may want to start focusing on more is Social Security and Retirement. Did you know that the Social Security Trust Funds are the biggest holders of US government debt at almost three trillion dollars? Therefore, any reduced demand in US Treasuries, at a time when spending on an aging population is projected to only increase, could negatively affect America’s retirees.
Even with its best intentions, retirees should not rely on Social Security as their only means for retirement savings. The information below further illustrates the need in the US for an emphasis on planning for retirement.
- Baby Boomers who are gearing up to retire, have less than half of the estimated savings that they will need in retirement.
- Only 1/3 of Americans who have access to a 401 (K) plan contribute to it.
- 50% of American workers reported to have less than $25,000 saved for retirement.
- Only 18% of American workers feel very confident about retiring.
We believe we can help! Our Current Income Portfolio is an attractive solution for investors looking for conservative allocations and additional yields in any interest rate environment that also can provide a sustainable and substantial income stream during your clients’ retirement.
This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.
Past performance is not a guarantee of future results. Indices are unmanaged and cannot accommodate direct investment. Themes assigned as per Roosevelt Investments’ evaluation. Risk tools may include cash or other securities that we believe possess a low or inverse correlation to the overall market.
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