We have a New Administration. What this means for our Money

President Trump has signed many executive orders.

 

Some of the challenges will be resolved quickly. Others will take more time.

 

The federal debt will likely push yields and interest rates higher for several years. Ferenc shares why this is happening. 

 

When bonds mature, the government sells a new bond at the current interest rate. About $3T of the $36T of total debt matured in 2024. That was an all-time record. 

 

Almost no one is aware that about $7T of bands will mature and have to be sold in 2025. This will push bond yields, interest rates, and borrowing costs higher. 

 

Multi-trillion dollars of bonds will mature each year until 2030. Expect higher bond yields, interest rates, and borrowing costs for years.

 

How to thrive in a higher bond yield environment :

1. Pay down debt, particularly high interest debt. Your Personal Bank can accelerate debt pay-off.

2. Reduce market risk. Higher bond yields are a risk to stock market returns. Higher cost of borrowing tends to reduce company profits.

3. Increase returns in fixed assets to maximize returns. Dividend paying insurance policies, annuities, and guaranteed lifetime income historically pay the highest returns in the fixed asset space.

 

 

Many financial experts are calling this the "golden age" of fixed investments.

 

Even if the Trump administration does everything right, some problems will take a while to fix. Debt is a major challenge.

 

Record levels of debt requires record selling of bonds. This pushes bond interest rates higher. 

Until the government starts paying down debt, bond interest rates will remain elevated.

 

When bond yields (interest) increase, institutional investors tend to move out of the stock market and into the bond market.

 

Many institutional investors like banks, insurance companies, and pension funds are focused on obtaining steady consistent cash flow to pay their liabilities rather than accumulation. These large institutional investors have the ability to move markets.

 

Blackrock, Goldman Sachs, JP Morgan, and Vanguard analysts all predict S&P 500 index returns will average 3-5% annually for the next decade.

If the analysts are correct, Your Personal Bank dividends, annuities, and guaranteed lifetime income will all outperform the S&P 500 over the next decade without market risk and tax-favored.