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Overcoming Interest Rate Drag on Your Portfolio’s Rate of Return- Season 3: Episode 3

You may have heard that a “traditional” balanced portfolio consists of some kind of mix of stocks and bonds: 60/40, 50/50, or something similar. The logic is that having a combination of stocks and bonds in a balanced portfolio acts as a potential buffer against loss with the goal of providing an opportunity for steady growth.

But as interest rates have remained near their historic lows over the past decade or so, some investors are finding that those low interest rates are bringing down their overall rate of return.  As a result, some in the finance industry are suggesting that it may be a good idea to raise the stock allocation to make up for this.

Is doing so a good idea?  If not, then what should an investor do?  What are the alternatives?  Find out more from Johnny Dean and “Professor” Rick Plum on this week’s episode of Managing Your Financial Future.

Important Information:

It is important to keep in mind that investments in fixed income products are subject to liquidity (or market) risk, interest rate risk (bonds ordinarily decline in price when interest rates rise and rise in price when interest rates fall), financial (or credit) risk, inflation (or purchasing power) risk and special tax liabilities. Interest may be subject to the alternative minimum tax. Treasury securities are backed by full faith and credit of the U. S. Government but are subject to inflation risk.

The investment professionals are registered representatives with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. Lucia Securities, LLC was acquired by LPL Financial August 2020. The investment professionals of Lucia Securities, LLC are now affiliated with LPL Financial and are conducting business using the name Lucia Capital.

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