The Agbay Group is featured in Hour Magazine and DBusiness magazine as 2010 and 2011 Five Star Wealth Manger*.
While we believe it's important for our clients to recognize who we are, we also want them to recognize who we are not:
Not having any proprietary products to offer allows our independent financial advisors to truly be consultative in our approach instead of a product distribution channel. We are completely transparent and do not engage in behind the scenes revenue sharing or marketing agreements. We offer advice and solutions as corporate retirement plan consultants and personal financial advisors; it's that simple.
Our independent financial advisory investment styles are unique: we focus on the buy-side AND the sell-side of the investment process. The purchase of an investment is a one time event. However, the decision to sell is an ongoing process and discipline that is often overlooked and frankly ignored. We believe the greatest value in portfolio management is knowing when to sell.
*Award candidates were evaluated against 10 objective eligibility and evaluation criteria associated with wealth managers who provide quality services to their clients. Research was conducted by Five Star Professional and Wealth managers do not pay a fee to be considered or placed on the final list. The Five Star award is not indicative of the wealth manager’s future performance. For more information on the Five Star Wealth Manager and the research/selection methodology, go to www.fivestarprofessional.com
Agbay Group In The News
In 2015, many commonly used retirement contribution limits and tax rates will be adjusted. For some limits, it will be the first change in several years. This article highlights most of the significant changes including the 401(k) and 403(b) increases from $17,500 in 2014 to $18,000 in 2015. Also, the age 50+ catch-up contributions for 401(k) and 403(b) plans will see an increase of $500 to $6,000. This is the first change in the catch-up limit since it increased to $5,500 in 2009.2015 Key Numbers PDF
It's no secret interest rates are at historical lows. We've experienced a 30 year bond market rally that, when it comes to an end, may be worse than most any stock market decline we've seen.
Many investors have been investing in bond mutual funds – from high yield to U.S. treasuries. Unfortunately, we have been conditioned to think that bonds and bond funds are safe.
However, it depends on how and why you own them. Most investors buy bonds because of their safety and certainty. For example, a 10-year Treasury may pay 2.4% annually and at the end of the term, principal is repaid to the investor. That's pretty straight forward. However, investors investing in bond funds could see a dramatic difference.
Bond funds do not have a maturity; there is no set interest rate (coupon) and no guaranteed return of principal. One more thing, they are accompanied by investment management fees often in excess of 1% or carry a sales commission of nearly 4%. Peter Lynch, the renowned manager of the Fidelity Magellan Fund addressed his concern about bond funds in his book Stocks for the Long Run by saying, "I may lose some friends in the bond-fund department for saying this but their purpose in life eludes me."
An increasing interest rate environment is bad for most bonds and bond funds; they tend to go down in value when rates rise. However, if you own individual bonds you may see them decline in value but if held to maturity you should receive par value. Again, unlike individual bonds, bond funds do not have a stated maturity so you may never receive your principal value back. Moreover, if other investors start to liquidate their shares of the bond fund, the manager may have to sell bonds for a loss (to generate cash). More than likely those bonds would be sold for a loss and will no longer exist in the fund for them to return to par value.
The yield on the bellwether 10-year Treasury note spiked to 2.16% at the end of May from 1.67% the end of April. That rate rise hammered many bond funds: funds that invest in long-term government bonds, fell 6.8% last month, according to Morningstar; emerging markets bonds fell 4.7%. Some funds even use leverage and lost in excess of 20% - in the month of May!
The solution is to invest in a portfolio comprised of mostly individual securities so your returns are not based on other investors' behavior – ie: liquidating their shares of a mutual fund and diminishing your return. If you own an individual bond and it goes down in value, simply hold it to maturity to receive the par value. You also gain something a bond fund doesn't offer: more certainty, safety and predictability: a predictable income (coupon) and a return of principal at maturity (assuming the credit quality of the company can pay it)
If you think rates will be increasing over the next year or two, this is the time to right the ship – before the tsunami. We would be happy to discuss our approach to fixed income investing and how you could benefit. Please do not hesitate to contact us.
- 403(b) Fair
- New IRS Indexed Limits For 2013
- IRS - Payroll Tax Cut Temporarily Extended
- Solutions to the Target-Date Fund Dilemma
- 2013 Department of Labor Initiatives
- Shielding Plan Fiduciaries from Participants’ Investment Losses
- Action Can Reduce Fiduciary Risk When Stock Markets Swoon
- Viewpoint: DOL Coordinates Disclosure Deadlines—The Cart Before the Horse No Longer
- DOL Aligns Deadlines for Retirement Plan Fee Disclosures
- Lower Payroll Tax Could Bring Higher 401(k) Savings