Why Investment Certificates are a GREAT Investment!

My wife has been on my back all year.  “Why do we have fixed income investments when the market is doing so well,” she keeps badgering me.  “They don’t pay very much!”

As I’ve rolled our maturing Investment Certificates into new ones offering the latest, higher yielding rates, she has become a little less grumpy.  “Well that’s better, but still not like the stock market the last couple years,” she said.

I’ve tried to explain that during the last few years the market has actually been very untypical.  We haven’t experienced the volatility and corrections that are normally inherent in the market.

Consequently, in the last week or two, I’ve pointed out to her that while we’ve become very complacent in watching the market go up, it can also gyrate wildly or go down as it has.  I showed her our quarterly DevCo statement and reminded her that the interest we’ve earned is all ours and won’t go away.  While not as “sexy” as stock market investments, DevCo investments produce steady, assured growth in assets and help to “cushion” our overall assets in periods of turbulence.  She’s a little more understanding of me.

Fixed income investments are an important component of anyone’s financial plan.  There’s an old rule of thumb that the percentage of fixed income investments in your financial plan should be equal to your age.  Thus, if you’re 65, the rule would say you should have 65% in fixed income investments like DevCo certificates; if you’re 75, it should be 75%.

More recent theory suggests that the rule is a bit too conservative, and your particular investment knowledge and skills may suggest a slightly more aggressive style, but it’s still a good place to start.

If you’d like to talk to us about how DevCo certificates can enhance your financial plan, please call us at 804-521-1121.