In true Tortoise and the Hare like fashion from the old school fable …..
There’s a tug-of-war that goes on between the turtle and the hare…..
We all know the ending, although some endings have changed over the years, but stay with us for just a second, as we bring a financial parallel to our fable.
In our interesting story, bonds are the Tortoise and the Hare are Equities/stocks.
Why most need Tortoise/Bonds in their portfolios
Bonds are truly like the Tortoise as they’re more slow running, BUT also importantly, slow to lose value.
Equities/stocks carry Hare like returns that generally, over the longer term are faster, but in true Hare like fashion, can get really sidetracked at times (think October – December of 2018 Amateur hour time.)
Here is the Great News in our Story – You can do both!
The good news about investing, unlike the fable is that you don’t just have to be one or the other, but you can mix.
We would argue that mature (larger or for more mature folks) portfolios need a Tortoise for stability during bad times as well as the yummy income that bonds produce!
As the portfolio grows or the income needs rise, more Tortoise may be needed.
Early portfolios that have heavy contributions can frequently be all Hare/Equities/Stocks as the contributions making up a great percentage of the portfolio act like a stabilizing Tortoise.
Normal progressions may be 75% Hare, then 50% then 40% and 25% or less Hare are frequently ok …. with the remaining portions being Tortoise of course….
One of our favorites are 50/50 Hare to Tortoise ….
Another great part of having both in a portfolio is they tend to offset themselves naturally during bad times – when Hare/Equity/Stocks get smacked, almost inevitably Tortoise/Bonds have a field day – multiple reasons such as interest rates dropping when Equities rise and visa versa, as well as a Tortoise safe haven…
There are always unique situations such as all Tortoise due to immediate need or just dislike of volatility and all Hare when there are no needs for the future.
Look for a greater depth information in our coming Newsletter with possible follow up items and details here.
Needless to say we are fond of both the Hare and Tortoise.
Thanks for accommodating our juvenile humor!
Have a Great “Tortoise and the Hare” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
32.862841
-96.808100
Like this:
Like Loading...
And here is Pro Rata
It will be interesting to see just how many times we view this in the future for a refresher!
Why We don’t like to Move Money on Fridays – Break In – Inverted Yield Curve Update
Break In – On Friday the Yield Curve Inverted for about three hours – we have spoken at length on this subject, but want a little more time to see market participants reactions as well as Fed officials before making a current update.
As a reminder the Inversion of the Yield Curve has a strong recessionary signal some time in the future, frequently years in advance –
With a Newsletter already in print – coincidentally we had much talk about recessions, and even a definition. The two hour inversion did mess our Newsletter up a bit as until Friday it had not inverted – we will update you more with clarity soon!
Back to our regularly scheduled program/post…
Why we don’t like to Move Money on Fridays
As a weekend nears, specifically Friday … many’s favorite day of the week, we tend to dislike the movement of funds.
The reason is two fold:
There are of course times that money just HAS to move on a Friday, such as the closing of a home (in an abundance of caution, we frequently send funds on Thursday) or a last minute quick fill up of cash.
Regularly scheduled deposits are fine as the calendar determines this and being on such a regimented event, trouble is less likely.
Deposits or draws as we like to call them are a different story. When we are pulling funds from another account, we see the flow of funds from our end and can easily Shepard/see problems.
In a safe over sorry posture, look for us to recommend Thursday or our favorite day, Monday, for the movement of unscheduled funds.
Have a Great “No Friday Money Movement” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
Share this:
Like this:
Leave a comment
Posted in Clients/Clients Only, Economy, Education, FOMC, Interest Rates, Investing/Financial Planning, Market Comments, Why
Tagged FOMC, Interest Rates, Inverted Yield Curve, Move money, Wire