A Steady Secure Steam of Income
One of the stalwart performers of a balanced investment portfolio, fixed income securities in the form of investment grade bonds, offer a safe haven for your money. Bonds are used to produce a predictable stream of income while retaining excellent safety of principal. In addition, during deflationary cycles, bonds provide excellent protection by preserving purchasing power.
This level of stability makes bonds an especially attractive cash flow vehicle for investors such as retirees who utilize bond interest to help pay living expenses. Also attractive to some investors are the tax advantages that certain types of government and municipal obligations can offer to reduce federal and/or state taxes.
Creating a Personalized Strategy
Sound Investment Strategies, offers clients a disciplined methodology for optimizing income and protecting principal through the prudent purchase of quality bonds. Our strategy has been refined through decades of investment experience and analysis. It has also weathered the test of time and turbulent markets to serve our clients well.
In constructing and maintaining your bond portfolio, we are guided by your unique investment objectives, income needs, time horizon and risk/reward parameters. SIS seeks issues in the Government, Corporate and Municipal markets that have the desired quality, coupon level, term-to-maturity and important indenture provisions to suit your profile.
By continuously monitoring and assessing the valuation, yield spreads and credit ratings of the bond market, SIS is able to make targeted transactions on your behalf. To reduce interest rate volatility and assure optimum rate of return across your portfolio, bond maturities are staggered or “laddered” over consecutive years.
SIS’s dedication to the investment of capital in a process and format that is safe and liquid has resulted in superior levels of client satisfaction. It has earned our clients better relative rates of return in times of bull or bear markets, or anything in between.
Profile of a Laddered Maturity Schedule
- Bonds are purchased in equal amounts with sequential year-to-year maturities over a set of period of time.
- Bonds mature each year, providing liquidity in the event there may be a specific financial need.
- Maturing bonds are reinvested into longer maturities, usually resulting in a higher return on investment.
- Income is consistent and predictable.
- The portfolio is time diversified as well as investment diversified.
This strategy enables SIS to maximize income without undue risk. Historically, this strategy has provided a return of 75% to 85% of the long-term bond yield with only 30% of the volatility. In addition, adjustments can be made to adapt for interest rate cycles by altering the portfolio’s average maturities when reinvestments are made.