Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Brandy. Thank you. Appreciate it.
Brandy Auterson-Hurst:
So interest rates have increased pretty significantly in the economy the past few years. How are you thinking about these effects?
David Nelson:
Well, certainly it’s impacting different people in different places. If we talk about debt, individuals that have mortgages, things of that nature, car loans, credit cards, et cetera, this has clearly been a negative. We’ve gone from a fairly low rate to relatively high rates. I fondly remember buying my first home at 11 and a quarter percent. So the rates don’t look that bad in comparison, but clearly in comparison to five years ago, these are much higher.
Now, for individuals that don’t necessarily have a lot of debt but are savers, this has been a pretty nice opportunity. I have a chart here that’s going to show folks a couple areas, as far as maybe some opportunities as far as that people may want to take a peek at, and that being bonds. And we’re looking at high-yield bonds here, and we’re looking at high-quality bonds. The high-yield bonds would be the lesser quality, but yet yielding much greater. And if we look at the average today, and again, these are just averages. They’re somewhere in the neighborhood of 8%, whereas if we look at high-quality bonds, you’re looking at 5.5%. So things have really changed. And again, for the savers versus the individual that has debt, this might be a really nice opportunity.
Brandy Auterson-Hurst:
Okay. So what implications does this have for financial markets and viewers investments?
David Nelson:
Well, I think individuals should potentially take a look at diversification, that being maybe taking a little money out of equities, in other words, stocks, and maybe looking at taking advantage of some of these higher yields and trying to lock in some yield over an extended period of time.
Brandy Auterson-Hurst:
All right, David. As always, thanks for joining us.
David Nelson:
Thank you.