The Truth About Bonds

Bonds: Are They Really "Safe" Anymore?

The Dow Jones Industrial Average (DOW) plummeted almost 40% in about 30 days. THEN it came screaming back to within a few percentage points while making huge back and forth gains and losses ("whipsaw" is the term used to describe a volatile market). 

A lot of retirees are asking their brokers/duly registered advisors "Where do I put my money"??? And the broker/duly registered advisors are running to bonds as a historical "safe" haven. But lets take a look at what is going on since 1980 with interest rates and bonds. 

First a little education:

Bond Value and Interest Rates are like opposite ends of a teeter totter (as a youngster I loved being on teeter totters. They are SO much fun. Alas, because of my sized no one ever wanted to be on the other end because they would "accidentally" get stuck in the UP position (but that's another story altogether)). It looks like this:

So when the Federal Reserve (which is neither "Federal" or has a "Reserve") lowers interest rates the value of your bond goes up. Conversely, when the Federal Reserve (which is really a conglomerate of private banks) RAISES interest rates your bond value goes DOWN.

When the interest rate gets lowered: When you buy a bond for $100 you get an interest rate which is also referred to as a "coupon rate". Let's say your $100 bond has an interest rate of 5%. If the Federal Reserve LOWERS the interest rate your bond becomes more valuable b/c you could sell it for say $110 (making a profit of $10).

When the interest rate gets increased: Take that same $100 bond and the interest rate gets increased than your $100 bond would be worth only $90 (why would anyone buy your $100 bond when they could get it for $90? They wouldn't.) and you would sell at a loss.

As one goes up the other goes down. Teeter totter....teeter totter...teeter totter.....

"This is giving me a headache!"

"So what?" you might be asking. Well, would you think that the history of how the Federal Reserve raises and lowers rates might be just a little important before you take the word of your broker/dually register investment advisor and put your nest egg into bonds?

You bet it's important! 

So lets take a look:

As you can see here when the back in the 1950's the interest rate was near zero and climbed higher and higher for about 30 years all the way OVER 20%! That means if you bought a bond in 1980 and held it to maturity you gained over 20% with NO RISK! Ahhhh the good ole days.

Take a look at 2020 and where we are now. The interest rate is LESS than 1% (.09% at the time of this article). 

Why would a lower interest rate NOW be of concern for someone who is about to funnel their funds into the bonds? 

What happens when the Federal Reserve raises interest rates? What happens to your bond? Yep. It goes DOWN in value. 

Take a look at that chart again. Where are we in comparison to history? Well, besides 2008, we are at the LOWEST interest rate since the 1950s. 

Did you hear that? 

The interest rate (besides 2008) is the LOWEST it's been in 70 YEARS!

Is it POSSIBLE that the Federal Reserve (or FED) is going to RAISE interest rates sometime soon? Do you think the over $2,000,000,000,000 (that's trillion) we JUST printed out of thin air because of COVID 19, do you think that the FED wants to raise interest rates on America for the loan they just gave us?

You do the math. 

Watch yourself out there. Brokers/dually registered investment advisors are using 50 year old strategies with you retirement funds. "Modern Portfolio Theory" is what it's called and it just doesn't work in your retirement. 

Don't take my word for it. 

Look at the numbers. Numbers are pesky little things because they don't have emotion. 

WE give them emotion. 

Doing something the same way just because you've always done it that way doesn't make it right going forward.

For more information call or visit www.clcinvestmentadvisors.com 

David Cadarette is a registered Fiduciary Investment Advisor Representative with the Securities & Exchange Commission (SEC) and is the CEO of CLC Investment Advisors, LLC with offices in Petoskey, Boyne City, Mount Pleasant & Traverse City, Michigan. He currently lives in Charlevoix Michigan with his family. 

For answers to other questions or to learn more visit: www.clcinvestmentadvisors.com

COVID 19

Try these 3 Actions To Have a Better Life IMMEDIATELY

There are many, MANY things you can do during quarantine that would improve your life. And with so many options where do you start? CLC Investment Advisors, LLC has been working with experts to come up with 3 easy, yet practical actions that you can complete in a very, VERY short amount of time.


1. Drink Water

You need to stay hydrated during these times. If you go to any doctor and one of the fundamental actions he/she will tell you is to drink more water. Seems elementary but it makes a HUGE difference. 

I personally carry around a gallon jug I bought for $10 (it's glass) and finish it everyday (okay 5 out of 7 days).  I've heard it said you are supposed to drink half your weight in ounces per day (roughly speaking). 

I weigh 215 pounds and half of that is 107.5 and that is the number of ounces per day I am to consume. 

Try to carry water with you wherever you go (like you can go anywhere now besides outside). Put it in a jug, canteen, or a Mason JAR. Because if I don't have my jug with me at all times:  I will NOT drink nearly the amount of water I'm supposed to.

So carry the water with you and DRINK IT!!

This Picture Makes You Thirsty 

2. Breath Deeply

According to health professionals when we are under stress we take short, shallow breaths. This can have a significant impact on our physical, mental and emotional health. Taking time to shut off the noise and breath deeply will have an immediate impact on your overall well being. 

I'm not talking about a 20 minute session on meditation here (although that might be helpful). 

Just 5-6 deep breaths in a row. How long does that take? 20-30 seconds? 

Give it a try and I bet you'll be MORE than pleased with how you feel.

IN and OUT...IN and OUT...ahhhhh!!

3. Forgive Yourself & Forgive Others...QUICKLY

Quarantine is a challenge for everyone (some more than others and some MUCH more than others). When you are going through challenging times you become stressed and frustrated. And during those times let's face it: You or your loved ones will say and do things that they normally would not do. 

When they do act "Special" let this thought permeate your mind:

 "That's not them, they wouldn't be acting that way if they weren't going through ___________ right now. I won't let it get to me."

Or when YOU do or say things that you normally wouldn't and are "Special". I recommend apologizing to the person you offended (I cannot tell you how many times I've said "sorry" to my wife and kids lately) .

And once you've asked for forgiveness: Forgive YOURSELF!! 

Move on and do better next time. 

This is a hard thing to do for sure that will take practice. But let's not heap GUILT on top of all the other emotional strain you're going through! 

4. Turn off your electronics and 24/7 News (Hey I thought you said 3 tips?) 

More than anything this will help in your attitude and overall outlook on life. 

Yes, stay informed. 

Yes, stay up to date on changes. 

But come on, do you really need to be scrolling through Facebook or your political party's news website as much as you do now? Is it within the realm of possibility that you could cut it down...JUST A BIT?

Does it really matter what the H-E-double hockey sticks someone said about something or someone who you've never met that doesn't affect your life? 

Let me help you with the hard ones: NO. It doesn't. 

Shut your phone, TV, Tablet, iPod, live stream, internet, satellite or whatever else way you plug into the mainstream media for just 4 hours today. 

Try it... I DARE YOU!

We are praying for you and your family during these unique and challenging times. Leave a comment and let us know if this has or has not helped.

I look forward to hearing from you soon.

David Cadarette is a registered Fiduciary Investment Advisor Representative with the Securities & Exchange Commission (SEC) and is the CEO of CLC Investment Advisors, LLC with offices in Petoskey, Boyne City, Mount Pleasant & Traverse City Michigan. He currently lives in Charlevoix Michigan with his family. 

For answers to other questions or to learn more visit: www.clcinvestmentadvisors.com

$25 GIFT CARD Activity Challenge

Supporting Your Home Town Businesses
Act. Support. Share.

Hello Fellow Quarantined Michigander!

Here at CLC Investment Advisors, LLC we are all about business! We believe business is the backbone of our Free-Enterprise system here in America and are committed to supporting our neighbors.

During these times of isolation CLC Investment Advisors, LLC has developed a game that will help you stay focused, active AND support your local community businesses. If you’re anything like me, you started out this quarantine mandate with a good attitude and a list of things you wanted to accomplish…but, for me, the last part of this first week has been challenging.

Alright, I’ve had a bad attitude!

I admit it.

The cause of my “stinking thinking” has been putting my focus on the negative: the extremely volatile market, Facebook feeds, nightly news, in-laws (hahaha), etc. 

It reminded me of the almost cliché sayings: 

“Where your focus goes, energy flows.” -Tony Robbins

“Life is like a camera, what you focus on will develop.” -Unknown

I have decided as of today that I will no longer inundate my mind with constant bad messages, but instead have chosen to put good things into my mind (yes I'll stay informed on what's happening but I KNOW I can cut down on my intake of bad news).

So to make all of this a little more fun: How about a little competition?

Here's what you must do to be entered into the drawing for the FREE $25 Local Business Gift Card:

1. Share this contest/blog link on your Facebook Timeline.

2. Complete 5 of the 10 activities listed below (honor system) by Friday April 3rd at 5:00pm.

3. Post a positive story/picture in the comments about one action you did that was "memorable". 

You will then be placed in the drawing and a winner chosen at random.

The winner will be announced Sunday April 5th! 

Don't be this guy!!

GET BUSY!! You've only got until Friday at 5:00pm!!!

Quarantine Activity Checklist (must complete 5 of 10)

• Read out of a self help book for 10 minutes each day

• Organize Closet or Garage

• Text an encouraging message to the first 10 people in your phone's contact

• Go for a 10 min walk 

• Help someone in your house with a chore or project

• Have a candlelight dinner with your spouse, family or self (online dinners count)

• Make a family budget 

• Make a list of 20 things you want to do when the quarantine is over

• Rearrange living room or bedroom 

• Pick up a new hobby (paint, draw, instrument, working out)

David Cadarette is a registered Fiduciary Investment Advisor Representative with the Securities & Exchange Commission (SEC) and is the CEO of CLC Investment Advisors, LLC with offices in Petoskey, Boyne City, Mount Pleasant & Traverse City Michigan. He currently lives in Charlevoix Michigan with his family. 

For answers to other questions or to learn more visit: www.clcinvestmentadvisors.com

How to Maximize Your $1,200 Stimulus Check

Advice From a Fiduciary Investment Advisor

Wednesday morning the United States government approved a MASSIVE $2 Trillion stimulus package to help combat the destructive panic that has seized the world and the financial markets. Americans (below certain income levels) will be receiving $1,200 per person and each child will receive $500. Financial Experts weigh in on the right steps to take.

4 Steps to Maximize Your Stimulus Check

1.  Donate 10% IMMEDIATELY 

I’ve read a few articles on “How to Spend Your Stimulus Check” and almost ALL list giving as the LAST thing to do. It needs to be first…period.

I know this sounds counter intuitive. “Give some of my money away? What if I don’t have enough? What if I run out of money? What if I cannot buy food for my family? I cannot afford to give anything.”  

But that is fear speaking to you and donating a portion of your money will kill fear at its root. 

During uncertain times it is easy to get wrapped up with the unknown and to become afraid. Unhealthy fear makes us do uninformed things (just look at all the empty toilet paper shelves). Giving a portion away to someone or to a cause you believe in, will help you develop an abundance mentality. What is an abundance mentality? It’s the opposite of a scarcity mentality.

Scarcity Mentality – there’s only so much to go around. I’ve got to get all I can, save all I can and sit on the can!!

Abundance Mentality – even though some scary things are happening I know that God will provide for me and I am going to demonstrate this by sharing what I have.

Sharing opens you up to joy. Hoarding opens you up to despair (excessive amounts of TP). 

One mentality gives life. The other sucks life out of you.

One breeds a happier existence. The other breeds contempt.

"If you give, you begin to live.
You get the world." -Dave Matthews

2.  Establish An Emergency Fund (Food & Shelter)

An Emergency Fund is a set amount of money that you put away for…drum roll please…AN EMERGENCY!! 

Refrigerator breaks, you run low on food, car blows a blinker fluid gasket (I know nothing of vehicles), furnace needs repair, etc. Anything that interrupts you attaining the daily necessities of life. You do NOT spend this money on NON-emergencies which include, but not limited to:

-       Kid’s birthdays (they come around every year on the same day)

-       There’s a sale online of 50% off  (unless it’s toilet paper! Okay no more TP jokes)

-       There’s 0% financing available on that $63,000 truck you “need”

-       The big screen TV at Wally-World is giving a 70% rebate!

-       I can get 2,000 more channels on my cable TV for “only” $150 a month

-       Anything else that doesn’t include necessities: food & shelter

To learn more visit Dave Ramsey's site on Emergency Funds:

https://www.daveramsey.com/blog/quick-guide-to-your-emergency-fund

"Money is a lot like oxygen, if you have enough
you never think about it." -Unknown

3.  Pay Down High Interest Debt

Getting rid of high interest debt can go a long way in establishing a more enjoyable life. On average if you have a credit card and pay the minimum payment you will pay off the balance in 30 YEARS!!1

Debt on “lifestyle” purchases (TVs, computers, game consuls, etc.) gives you pleasure in the movement but will give you long term stress in the future (having to make the payment and pay the interest). On most high interest debt you pay interest up front and very little goes to the principal. 

Let me illustrate: Let’s say you buy a TV on credit for $1,000 (hey it was marked down from $2,000!!) and your minimum payment is $100. More than likely your $100 payment pays $70 in interest and $30 toward the $1,000 you borrowed leaving a balance of $970. Yikes.

Wiping out all of that debt or a large portion of it will secure your future and make you feel like you are gaining control over your finances. It will put you in the drivers seat of your life.

To learn more visit Dave Ramey's site on DEBT:

https://www.daveramsey.com/askdave/debt?snid=tools.debtadvice

Or use common sense like this guy:

4.  Save The Rest

Once you’ve funded Steps 1-3 then don’t spend the remaining funds on anything else. Put it in a high yield money-market or savings account that is liquid (meaning you can get to it without penalty). We don’t know what the future may hold or what may happen during these times so having money put away that you don’t touch will give you a bit confidence in the future.

To calculate the amount of your stimulus check visit: https://www.washingtonpost.com/graphics/business/coronavirus-stimulus-check-calculator/

David Cadarette is a registered Fiduciary Investment Advisor Representative with the Securities & Exchange Commission (SEC) and is the CEO of CLC Investment Advisors, LLC with offices in Petoskey, Boyne City, Mount Pleasant & Traverse City Michigan. He currently lives in Charlevoix Michigan with his family. 

For answers to other questions or to learn more visit: www.clcinvestmentadvisors.com