RS Crum, Inc.
Ashley Bleckner is an Advisor with RS Crum and also works in collaboration with a number of the lead advisors in the areas of financial planning and client service. RS Crum specializes in providing objective financial advice to help clients manage, grow, and protect their assets during their working lives and through retirement. Ashley and the team has a mission to help people make sound financial decisions, accumulate and preserve wealth, and otherwise pursue their life goals without the burden of financial stress.
Prior to committing to RS Crum, Ashley spent over three years with a wealth management firm based in Toledo, Ohio serving as a Client Relationship Manager where she helped develop, coordinate, and implement financial plans and manage day-to-day client requests. Ashley takes great pride in her client relationships. Actively involved in the community, Ashley is a member of the Orange County FPA and CalCPA. Ashley has volunteered her time on a number of philanthropic projects, including WomanSAGE, “It’s Your Money,” Alzheimer’s Orange County, and is a co-founder of the Austin Kudzia Scholarship.
Ashley has a passion for travel, education and the arts. She has previously studied in Florence, Italy and has taught several college classes in Economics. Ashley has a Bachelor of Science in Business Economics from Miami University and a Masters of Arts in Economics from Bowling Green State University.
MA, Economics, Bowling Green State University
BS, Economics, Miami University (OH)
Assets Under Management:
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We have fielded this question from several clients recently. And, it is an understandable concern given the rising interest rate environment that we have witnessed over the last few years. We are also seeing some negative performance in bond prices for the first time in a while.
However, before answering the question of whether to sell your bonds, let’s first review why we have bonds in a portfolio.
Bonds play two specific roles: 1) to provide a predictable income stream, and 2) to provide an asset that moves in the opposite direction of the stock market, reducing volatility when stocks' prices decline. If this is the purpose of bonds, then we should continue to hold them given the relatively low risk with respect to the expected return.
Now let’s quickly dissect the differences in bonds, because not all bonds are created equal.
When it comes to credit quality, you want to own bonds with high ratings (high credit quality) when the stock market is experiencing volatility. This is because of the “flight to quality” which occurs as people jump from risky assets to safer ones. In the past, the safest investment during a stock downturn has been the 30-year treasury. However, this investment could prove to be a disaster in a rising interest rate environment since long-term bonds go down in value the most as interest rates rise. To balance these risks, I use high-quality, short-term bonds – providing protecting in both situations.
It’s important to remember that we shouldn’t necessarily be afraid of rising rates. In fact, we should applaud them. If you are a net saver or retired on a fixed income, then rising interest rates are advantageous because rising rates can provide a higher predictable income in the future. (Note: If you are a net debtor, then the opposite is true. In this scenario, lower interest rates would allow for you to more easily afford your debt payments.)
We recommend our clients remember news headlines are structured to get viewers, even at the cost of creating anxiety where it shouldn’t exist. Yes, interest rates are heading higher, but the story line should be the opposite of what we are reading. The news pundits should be pointing out that for the first time in nearly a decade, the economy is doing well. Wages and company profits are rising and stable. Interest rates are increasing and adjusting to this positive activity, reversing a long-term trend of pessimism.
The moral of the story is: I keep bonds in my portfolio because of their two primary roles (consistent income and negative correlation) are still critically important today.
A high level way to evaluate the productiveness of rental property is to compare the capitalization rate (cap rate). The cap rate is the ratio of net operating income to property value. While there are other variables to consider in the sale decision, this is a good starting point.
Cap rate = (Yearly rental income - taxes - insurance - repairs/maintance - management fee - utilities covered by you - miscellaneous expenses)/property value
Based on the values you provided, the cap rate would be 2.4% -> (15,600 - 10,200 - 1,200 - 720)/145,000
I would recommend connecting with a financial advisor to discuss this investment relative to other investments.
I have heard this many times and it has never made sense. The idea is if your employer matches 3% of your salary, then you (the employee) should only contribute 3% to your 401(k). I guess at a gut check level this might make sense, after all “why should I put in more than The Man?” But, this completely disregards the tax savings of contributions. The tax savings are significant even for modest income earners.
Besides, there may be no easier way to save. It is automatic and the impact on your take home pay is much less than the dollars saved. For those who have difficulty saving, this is often the first place we look. Our suggestion (regardless of matching contributions) is to put in as much as you can afford, plus a little more, up to the maximum.
If you have the option of a 401(k), I highly encourage you to participate. There is usually a company match which is free money. Within the 401(k) (or Roth or any investment vehicle), mutual funds are the best way to get diversification by broadening your investment exposure and lowering your risk/volatility.
Many mutual fund companies provide asset allocation funds, which include both equity/stock and fixed income/bond positions. These are great funds that re-balance automatically. I would encourage you to do your research on mutual funds before purchasing. Specifically take a look at the objective of the fund, the cost of the fund, the portfolio manager running the fund, and third party reviews of the fund.
I'd be happy to have a quick chat on the topic if you want to learn more.
I recommend consulting with a CFP and/or CPA before making any decisions.
With annuity selection, I advise clients to read the fine print. The devil is in the details. Be aware of:
- High commissions/sale incentives for the individual selling the product,
- High expenses for investor,
- They are illiquid and frequently have surrender periods,
- There is no step-up in cost basis at death,
- Guarantees are not always what they look like
For clients where annuities are appropriate (based on personal circumstances), I recommend checking out TIAA-CREF Intelligent Variable Annuity or a Vanguard annuity.