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Why Investors Should Consider This Under-the-Radar Asset Class, According to a Finance Expert
Why Investors Should Consider This Under-the-Radar Asset Class, According to a Finance Expert

Yahoo

time19-07-2025

  • Business
  • Yahoo

Why Investors Should Consider This Under-the-Radar Asset Class, According to a Finance Expert

Wondering how to get more out of your investments but feel like you've already tried everything? You're not alone. With the markets constantly shifting and buzzworthy investments getting the loudest hype, it's easy to overlook less dramatic but reliable investments. One investment type that might have flown under your radar is known as 'fixed income.' Learn More: Read Next: 'My favorite asset class is 'fixed income,'' said Jan van Eck, CEO of Van Eck Associates Corporation, at a University of Virginia investing conference. According to him, fixed income investments like bonds are a compelling investment option — especially with higher interest rates and a volatile stock market. Find out why you should consider investing in this asset class. What Is Fixed Income and How Does It Work? So what does 'fixed income' actually mean? It's just an umbrella term for investments that pay a, yes, fixed amount of income on a regular basis, usually in the form of interest. Think of U.S. Treasury bonds, municipal bonds, corporate bonds, certificates of deposit (CDs) or even bond-focused exchange-traded funds (ETFs). While these investments don't deliver huge growth, they do bring predictable returns and lower risk. That makes them especially attractive for retirees, cautious investors or anyone looking to balance out a more aggressive portfolio. Be Aware: Why Consider Fixed Income Investments Now? With interest rates still decently high and not likely to come down in the near term, fixed income investments can deliver real returns. For a while now, bonds and CDs have been paying out yields that can keep up with inflation. Van Eck explained that the power of compounding returns is one of the major reasons investors should revisit this asset class. 'People have forgotten the beauty of getting up to 8% on a fixed income return… If you reinvest those dividends, compounding at a high rate makes up for some of the problems you have with fixed income,' Van Eck said. For example, a $10,000 investment in a 5% bond that compounds annually for five years grows to more than $12,700. That's a level of dependable, low-risk growth without any of the worries of market losses. Lessons From the 1970s: Bonds Outperformed Stocks Van Eck pointed to a fact he found surprising in looking at historical data: During the inflation-heavy 1970s — an era when commodities and gold were high performers — bonds actually outperformed stocks, once those outliers were stripped away. 'I'm not saying we're going to the Seventies per se,' he said, 'but I think people have forgotten the beauty of getting 8% on a fixed income return.' Today's interest rate environment may not be the same as the 1970s, but steady income and compounding forces are a great combo for any investor. Who Should Consider Fixed Income Now? Fixed income investments can act like an anchor in nearly any portfolio, but they may be especially valuable for: Retirees looking for steady income Risk-averse investors who are being careful with their capital Anyone building a diversified portfolio You don't need to buy individual bonds to benefit, either. Investors can explore options like bond ETFs, high-yield savings accounts, I-bonds and CDs. For those hesitant about tying up their money for the long term, short- or intermediate-term bond funds may offer more flexibility with less interest rate risk. A Good Option in a Diverse Portfolio Fixed income may not be trendy, but anyone looking to build a diverse portfolio should consider this asset. With higher yields, strong compounding opportunities, and proven performance in past high-inflation eras, sometimes a 'boring' investment is the smartest one. Smart investing is one part trying to predict the future, and another part looking to investing lessons of the past. More From GOBankingRates How Much Money Is Needed To Be Considered Middle Class in Your State? This article originally appeared on Why Investors Should Consider This Under-the-Radar Asset Class, According to a Finance Expert Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data

Can you consolidate debt while on Social Security?
Can you consolidate debt while on Social Security?

CBS News

time17-07-2025

  • Business
  • CBS News

Can you consolidate debt while on Social Security?

It's no secret that living on a fixed income can make managing your debt feel like an uphill climb. For retirees or those receiving Social Security, even small monthly payments can strain already tight budgets. And when you add in sticky inflation, which is driving up costs for everything from groceries to healthcare, it's easy to see how credit card balances and other debts can quickly spiral out of control. If you're in this situation, you may be wondering if debt consolidation is a way to get some breathing room. After all, rolling multiple debts into one loan with one monthly payment sounds appealing, especially if it comes with a lower interest rate. But when Social Security is your primary or only income, the options for debt consolidation may look different than they would for someone still working full time. So, can you consolidate debt while on Social Security? And if so, is it the best route to take, or are there other strategies that might work better? Here's what you need to know before making your next move. Find out how you can start tackling your high-rate debt today. Yes, it's possible to consolidate your debt even if your income comes solely from Social Security. But there are some important nuances to understand, and qualifying for a traditional debt consolidation loan may be challenging in some cases. Your Social Security benefits count as income when applying for a debt consolidation loan or other financial products, so lenders will typically consider them as part of your application. However, because many retirees are on fixed or limited budgets, qualifying for a large enough loan, or one with favorable terms, can sometimes be difficult. Paying a much higher rate for a debt consolidation loan negates a lot of the benefits that come with this strategy, so it may not be worth consolidating if the rate is just a point or two lower than your credit cards. Lenders may also look closely at your debt-to-income ratio to ensure you can afford the consolidated payment. A higher debt-to-income ratio can make approval harder, even if you've been diligently making the minimum payments on your current debts. So, if your Social Security benefits are modest and your debt levels are high, it could be tough to qualify. That said, if your credit is strong and you own a home, a home equity loan or home equity line of credit (HELOC) might be a viable way to consolidate your debt. These borrowing options allow you to use the equity in your home to consolidate higher-rate debts like credit cards into one lower-rate monthly payment. But this approach comes with tradeoffs, and if you fall behind on payments, you could risk losing your home. For those without significant assets or excellent credit, credit counseling can offer an alternative in the form of a debt management plan. With a debt management plan, the credit counseling agency works directly with your creditors to lower interest rates and eliminate certain fees, making your debt more affordable and manageable. And, you send one monthly payment to the credit counseling agency, which essentially "consolidates" all of your debt into one obligation. Unlike a debt consolidation loan, though, there's no requirement that you'll need to meet based on your income or credit score. Explore your debt relief options and find the right fit now. If debt consolidation isn't feasible, don't lose hope. There are other ways to tackle debt while living on Social Security, including: Consolidating debt while on Social Security is possible, but it's not always a straightforward process. Whether it's through a debt consolidation loan, home equity or a debt management plan, the right approach ultimately depends on your income, credit and overall financial picture. If debt consolidation isn't an option, the good news is that there are still paths to relief, including debt settlement, hardship programs, and, in some cases, bankruptcy. Talking to a credit counselor or debt relief expert can help you weigh your choices and find the safest, most effective way to manage your debt on a fixed income.

7 Financial Strategies Retirees Can Learn From Those Still in the Workforce
7 Financial Strategies Retirees Can Learn From Those Still in the Workforce

Yahoo

time12-07-2025

  • Business
  • Yahoo

7 Financial Strategies Retirees Can Learn From Those Still in the Workforce

Retirement doesn't mean your financial journey is over. In fact, it's just entering a new phase. As a retiree, you've got to stay on top of your expenses since you're likely living on a fixed income and want to avoid running out of savings. That's why it's more important than ever to stay proactive with your money. Learn More: For You: While it may seem backwards to look to younger generations for advice, there are plenty of financial strategies retirees can learn from those still in the workforce. Take a look at these seven smart money habits that can help you protect your nest egg and enjoy the retirement you've worked so hard for. 'By leaving a portion of your portfolio invested in the market, you have the opportunity to hedge against inflation and seek higher returns,' said Jordan Mangaliman, owner of Goldline Financial Services. It's tempting for retirees to depend on things that feel safe, like fixed-income assets, pensions and Social Security, but you don't have to miss out on potential returns. Continue investing to keep your funds growing. Find Out: 'Younger generations that are still working are more likely to keep an emergency fund, but it doesn't mean retirees shouldn't do the same,' said Mangaliman. While retirees may want to rely solely on their pension or investment income, it's important to remember that an emergency fund can bail you out when unexpected expenses crop up. 'While you aren't worried about job loss in retirement, you're not immune from economic woes like the possibility of a recession, and expenses like medical bills and car trouble can be hard to cover if you need to pull from retirement accounts,' added Mark Henry, the founder and CEO of Alloy Wealth Management. 'Think about how you can generate extra income, whether by working part-time, renting a room or even using your skills as a consultant,' said Erik Severinghaus, founder and CEO of Bloomfilter. 'It helps you financially and keeps you connected and engaged.' Working people often look for multiple income sources, because they can't rely on one paycheck. As a retiree, you may want to consider pursuing a side hustle or picking up a part-time job to ensure that you have enough money coming in. You may also want to try to find a profitable hobby so that you have something to look forward to while bringing in some extra cash. 'I've noticed that workers never stop learning,' Severinghaus said. 'Whether taking online courses or following the trends, they know that knowledge is power. For retirees, this means you need to stay curious, too.' Keep investing in yourself — this could be by learning more about your finances, prioritizing your health or just practicing a new hobby. 'As you age, try to continue to educate yourself and stay up to date on how you can best manage your money, whether you do your own research or work with a financial advisor,' Henry said. 'If you learned to budget 30 or 40 years ago and never looked back, there are likely things you can do better and improve on, and there is absolutely technology that can make managing your money easier and more efficient. By staying informed on money management and your investments, you can spend more time enjoying retirement and spend less time budgeting and paying bills. The objective is to understand what's happening with your money so that you're not stressed out. Henry pointed out that, when used properly, credit cards are a great way to earn rewards and build credit — or maintain good credit in your retired years. Just because you're not employed doesn't mean you should be afraid of credit cards. You just have to use them responsibly. Henry added, 'If you use a credit card that offers rewards for things you already spend money on, like gas or groceries, you'll save money. If you already had a rewards credit card while you were working, consider switching to one that fits your needs and lifestyle in retirement.' If you start travelling often to visit family, for example, look for a card offering miles to save money on flights and hotels. The key is not to unnecessarily spend money for rewards but to let daily purchases add up. You'll want to have a budget or spending plan as much as you did when you were working, because you can't let your expenses spiral out of control. Henry added, 'Make sure to include categories in your spending plan for things you want to do in retirement, whether that's travel, experiences with family or recreation.' Regularly take inventory of all recurring expenses, like subscriptions or bills on autopay, and cut any that you don't use, similar to what you likely did when you were working. More From GOBankingRates 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance (And 2 Reasons They Should) This article originally appeared on 7 Financial Strategies Retirees Can Learn From Those Still in the Workforce

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