Did you know that a 1% rise in interests rates could result in a 10% loss in your bond portfolio?
Do you remember when interest rates were at 18% in 1980? Did you ever think that they would be at 0% for this long?
Investing in fixed income or bonds is mainly done to hedge your portfolio, reduce risk and provide income to a balanced portfolio. However, with rates at these low levels, returns on your fixed income portfolio after fees and expenses could be under 1% or even negative if rates were to rise.
Consider this: Your advisor constructed a balanced 50/50 portfolio of equites and fixed income. If the fixed income portion of your portfolio produced 1%-2%, this would mean that you need your equity portfolio to produce 10% to 14% in order to achieve a 5% to 7% long term rate of return.
How confident are you that your equity portfolio will achieve these type of returns moving forward? Has your advisor properly managed your long term return expectations?
Call:781-569-5909 Text:508-868-9980 jcasale@sagamorewealth.com
