El Paso – During a recent appearance on ABC‑7’s Smart Money program, financial specialist Patrick Romero of Mirau Capital Management urged retirees to look beyond the traditional belief that bonds are completely safe. Romero explained that while bonds remain a useful component of a diversified retirement portfolio, they are not immune to market forces.
Rising rates can hurt bond values
“Conservative doesn’t mean risk‑free,” Romero said. He noted that when the Federal Reserve raises interest rates, the price of existing bonds typically falls because newer issues pay higher yields. This dynamic can surprise investors who assume their bond holdings will retain value regardless of market conditions.
Understanding each investment’s purpose
Romero emphasized that retirees should first define what they expect each part of their portfolio to achieve—whether it’s steady income, capital stability, or easy access to cash. He cautioned against focusing solely on the amount allocated to bonds without considering the broader financial goals.
Alternative options
Among the alternatives Romero mentioned were certain insurance‑linked products such as fixed indexed annuities. These can provide a buffer against market downturns while still offering modest growth potential. However, he warned that such products often come with withdrawal charges and caps on returns, so retirees need to weigh the trade‑offs carefully.
Federal Reserve influence
With the Federal Reserve continuing to evaluate interest‑rate policy in response to inflation, Romero highlighted the close link between rate moves and bond prices. While the Fed does not set every bond yield, its decisions affect borrowing costs and overall market sentiment, which in turn influences the attractiveness of existing bonds.
Practical steps for retirees
Romero advised retirees to start by reviewing the intended role of each investment, considering income needs, liquidity requirements, and tolerance for fluctuation. “The goal isn’t eliminating every risk,” he said, “it’s making informed decisions about the risks you’re taking.”
Viewers interested in a deeper discussion can request a complimentary consultation and a retirement toolkit from Mirau Capital Management by visiting miraucapital.com/tv or calling (915) 233‑2904.
Original reporting: El Paso News (HLL/CB) — read the source article.
