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Neighbors of Kane County

Your finances: Grandma’s beef stew

May 14, 2015 08:47AM ● By Katelyn Nelson

by John Masus

As I reflect back on past experiences, I remember when I was a kid and we would drive down to Springfield to visit Grandma. She lived across the road from the state fair grounds and during the Second World War the fair grounds were used as a military camp for men going overseas. I was told that my grandmother and groups of other women would bake pies and take them over to the troops. Can you imagine? Apple, Blueberry, Banana Cream pies. Wow! I’m told it was a ritual every week.

When we went down to see Grandma, during our visits I remember Grandma’s beef stew. That was a Wow. I think she put everything but the kitchen sink into it with all the seasoning to top it off.

In my previous article, I talked about the five basic investment portfolios. So let’s start with the most conservative: Income with Capital Preservation

As the name implies, this portfolio is for people who want income with the lowest risk. So just like my Grandma’s beef stew, it’s good to have a lot of different things in it to give us the income along with the preservation. I realize that’s like eating the stew without getting fat, but at least we can work toward that goal.

In this scenario we could have laddered bonds of 70 to 80% of the portfolio. That could mean bonds maturing every year (short term) as well as bonds maturing in 10 or 15 years. You pick it.

That gives you the benefit of taking advantage of rising interest rates in the future as the short term bonds mature and you buy new ones at the higher interest rates. The longer term bonds could give you somewhat higher rates right now.

The bonds themselves could be a mixture of investment grade corporate bonds, as well as high yield bonds which means they are not investment grade. They are also subject to higher interest rate credit and liquidity risks than investment grade bonds. The actual mixture is something to determine based on need of income and risk tolerance. The laddering technique is designed to give you diversification in maturity times, types of bonds and interest rates. Diversification.

What about the other 20 to 30% of the portfolio. Stock (equity) portions help with the diversification as well as the objective of income or some growth. If more income is needed, dividend paying stocks may help. Although dividends are not guaranteed, corporations do not like to stop or lower dividend payments and there are many corporations that have paid dividends through thick and thin. Research is in order or the help of a financial advisor.

None of these strategies are a guarantee of success but they do give you some ideas.

 Oh, did I tell you that my wife who is also a grandmother makes great stew. I think I’ll have some. Good Luck! 

John Masus is an LPL registered principal with clients in 24 states. Securities offered through LPL Financial, member FINRA/SIPC.

To contact Mr. Masus you can email or visit our website at His office has been located in downtown Batavia for 20 years.

The opinions voiced in this material are for general information and not intended to provide specific investment advice for any individual. No strategy assures success or is guaranteed to protect against loss.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Diversification does not ensure a profit or protect against a loss. Past performance is no guarantee of future results.