Senior Magazine

Tom Holmes asks “What are Your Investments Earning?” in SENIOR Magazine 

Colorado Springs SENIOR Magazine 

What are Your Investments Earning? 

by: Tom Holmes 

Are your investments earning you at least 5.5% or more in annual income? 

Everyone I talk to today has great concerns about the state of our economy and their own economic future. Daily I address the question, “What should I do with my investments and savings?” 

When I wrote my book Plan To Retire On Full Pay several years ago I used a lot of ink to describe the importance of asset allocation. Asset allocation means that a well-designed investment portfolio should embrace a certain percentage of stocks, bonds and cash. As we get older, the strategy should be to reduce stock exposure (and the inherent risk in stocks) in favor of bond exposure to create lifetime income. Please note, I use the term bond with reference to all types of fixed income investment alternatives. 

Reducing this risk is more important than ever today and in the future. Investors who are over 50 years of age and/or retired should not have large exposures in stocks. This includes stock mutual funds or with portfolio managers who use stocks. 

But if you are using CDs as an investment vehicle, you might be robbing yourself of potential income. I hear often, “But CDs are risk-free!” Are they? Today the inflation rate is approximately 3.5% while CDs are earning 1-3%. Each year the CD investor is losing money as retail prices go up and CD returns do not. I don’t consider that a risk-free investment. 

The income objective I use for my clients today is that it net them 5.5-7.5% in annual income. I can do this, because I use alternative income investments that maintain predictable, sustainable and increasing incomes. I can help you increase your investment performance. Call me at 719-686-1110