David L. Blain, CFA, is the Founder and CEO of BlueSky Wealth Advisors, and the author of “Invest in Your Life, Not Just Your Portfolio.”
In the 7th episode of the 2021 Financial Forecast Series, BlueSky CEO David L. Blain, CFA, evaluates rising interest rates and the impact on your portfolio. While delving into historical rates and the fluctuating markets that set the trend, David affirms the stable influence of bonds in a well-balanced portfolio.
Rising Interest Rates | Episode 7 – Part 1
Highlights from Part 1:
0:00 – 0:35 | Introduction
0:36 – 1:36 | Where are we now? Rising Yields, the 10-year US Treasury Yield, Bond Return, Risk- Free Rate
1:37 – 4:57 | Where have we come from? Historical Context, First US Bank, Original Interest Rates, Quick Recession, Evolution of Interest Rates, All-Time Low
4:58 – 6:27 | How do interest rates work? The See-Saw Metaphor, Short-Term Bonds vs. Long-Term Bonds
6:28 – 9:58 | Why are interest rates rising? Federal Reserve vs. Market Rate, Rising Interest Rates Signals Economic Activity, Inflation Effect, Potentially Positive Impact
Rising Interest Rates | Episode 7 – Part 2
Highlights from Part 2:
0:00 – 1:50 | Where do we go from here? Projected Returns, Estimated Interest Rates
1:51 – 5:22 | Asset Allocation Implication; Historical Volatility of Interest Rates; Study of Interest Rates Over the Last 30 Years; Average Returns of Short-,Intermediate-, and Long-Term Bonds
5:23 – 6:04 | Majority of Returns from Bonds Come from Income, Rising Interest Rates Equals Higher Income
6:05 – 7:35 | Bond Maturity and Interest Rates, Time Horizon and Bond Maturity
7:36 – 9:25 | Bonds in the Portfolio as a Balance to Stocks, Relationship between Stocks and Bonds, Sub-Optimal Portfolio Allocation
9:26 – 10:08 | Optimal Portfolio Allocation: High-Quality Bonds, TIPS (Treasury Inflation-Protected Security), Short Bond Maturity
10:09 – 11:07 | Overall Implication: Bonds Still Stand as a Placeholder in Portfolio
