Jan 14, 2025
Insurance
dividends are 6%+ while policy loan rates are
5-5.3%. Dividend rates currently average about 1%
higher than the cost of borrowing.
Dividends are
expected to increase for the next 3-5 years if not
longer.
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 than
accumulation. These large institutional investors have the ability
move markets.
Historically,
when the 10 year bond approaches a 5% yield, the stock market
typically declines. The 10 year bond has recently increased to
4.7%.
Mortgage rates
are affected more by the 10 year bond than the Federal Reserve. 30
year fixed mortgage rates are typically the 10 year bond rate plus
2-3 points. Increasing bond rates equal increasing mortgage rates.
We will likely see 8% 30 fixed mortgages as the norm
soon.
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.