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CIP Quips

Rates Cause Pain

What’s in the news:

It should not come as a shock that retirees are having difficulty planning for retirement.  Historically, traditional retirement vehicles like CDs were their bread and butter.  However, a one-year CD hasn’t paid more than 1% since 2009, according to Bankrate.com.

So what is a retiree to do? In an effort to circumvent an unfriendly retiree marketplace, many retirees have included riskier investment instruments and practices into their retirement plans. 

Take the 82 year old retired dentist highlighted in the recent WSJ article “Stocks Have Tripled Since Crisis, but Low Rates Are Still Squeezing Savers”.  With 95% of his retirement nest egg invested in stocks, he doesn’t want to miss the rising tide of the equity markets or be distracted by stock gains in this low interest rate environment.  However, he, like the rest of us, doesn’t know how long this low rate environment will last. 

At the stock market’s 10 year low, the US treasury yield read 2.9%.  Now, eight years later and with the stock market at all-time highs, the US Treasury yield is only at 2.5%.  How long will retirees be in a low rate environment and perhaps without sufficient income for retirement?

Source: GOBankingRates. "Percentage on Track" and "Percentage Behind" are representative of their survey age groups.

What are we thinking?

Retirees and those planning for retirement need alternatives. They shouldn’t feel that taking bigger risks is the only solution to make up for a low income yielding environment.  Yes, dividend growth stocks, emerging market funds, junk bonds and REITs can offer higher returns, but in our opinion those come with more risk. 

Our Current Income Portfolio is a well-diversified, conservative portfolio with a consistent income stream built to take advantage of both low and high interest rate environments and could be a suitable actively managed solution for your clients. 



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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