Question:
For decades, Gene has preached the “Ten Year Rule.” In those days, strips and bonds provided productive outlets for intermediate term money. But with today’s low interest rates, those “productive outlets” seem to have disappeared. Under what circumstances, if any, would Gene consider bending his own rule?
Answer:
Yes, at Henssler Financial, we do bend the Ten Year Rule for people who have a considerable amount of money and a 10-year amount of liquidity is too much. What we have done is recommend to those people is to take the eighth through tenth year money and invest it in to an equity income portfolio. The yield on our recommended Equity Income Portfolio is about 4%. More importantly, the growth is above 7%.
With the market doing so well, you’ll find advisers pushing investors to be more risky. We feel investors need to stick with their investment plan. Depending on the comfort level, an investor can take on more risk with eight- to 10-year money. However, for those who do not have an extra margin of safety, we recommend CDs no more than five years to maturity. It is a case-by-case decision. The purpose of having 10 years of liquidity is to avoid having to sell stocks when prices are down.
At Henssler Financial we believe you should Live Ready, and that includes knowing how your time horizon affects your investments. If you have questions regarding your financial situation the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
