Is It Time To Fed Proof Your Portfolio

We are all witnessing the antics of the Presidential election that we see and hear in the media every day.   The Fed recently chose not to raise rates again recently and we don’t know if they will do it in September, December, or not at all this year.   However, when rates rise you will want to be prepared on what to do with your portfolio, so here are my tips on money moves to consider.

  • Consider Locking In Rates While They Are Low
    • If you have benefited from having a low adjustable rate mortgage over the past five or six years, you might want to consider locking into a 15 year or 30 year fixed rate mortgage while rates are low. This would prevent you potentially getting hurt if you plan to live in your property for a long period of time and you expect the Fed to raise rates.
    • Also, you might want to make a long term real estate purchase if this fits within your plan. Some of you may be waiting for the real estate bubble to burst, but the problem is by the time it does rates may be much higher, potentially giving you a zero net sum game when it comes to payments.
  • Consider Building A Bond Ladder
    • To Fed proof your portfolio, you may want to stick to bonds that have a maturity of 2 to 10 years, unless you look to buy long term US Treasury bonds. Be very wary of bonds (especially corporate) that have a long term maturity on them.  The main reason being is that interest rates and bond fund values tend work like a see saw.  If rates rise sharply, you could see a decline in the value of your fund.   Probably the closest place you should examine is your bond fund within your 401k because often participants do not know the actual maturities within the portfolios they own in the 401k.
  • Manage Your Stock Risk
    • If you are thinking about owning dividend paying stocks in your portfolio, consider buying stocks that have lower dividends but still have the opportunity for revenue growth. Consider avoiding stocks that pay dividends but sales are flat lining at the top level.  Also, you could looking at dividend paying companies with lots of cash on hand because they could either raise dividends or be able to purchase other businesses at a discount.
  • Begin To Stash Extra Cash In The Bank
    • They say cash is king. However, storing up some extra cash right now for a bond market, stock market, or even real estate market downturn could be a good idea for a portion of your portfolio.   Remember, buying opportunities are often best when things turn negative and return of principal can sometimes be far better than return on principal.

Only time will tell if and when the Fed will raise rates.  But, if you think it is coming after this election use these smart money moves tips to Fed proof your portfolio.

Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO ofoXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves

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My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

Background and qualification information is available at FINRA's BrokerCheck website.

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