Greetings,

The years continue to fly. We have a couple of fun and big announcements at Life Planning Partners, Inc.

First the big announcement – just as we encourage our clients that the best retirement should be approached as a series of phases, we personally work on our plans for the future. Tim Utecht has been an investment manager for 30 years now, and his goal is to spend the last third of his life on other adventures. Don’t worry! Tim is not leaving Life Planning Partners, but he is cutting to part time.

As we’ve announced previously, Brett Lozowski was hired to step in the role of trading with the plan for him to eventually become the investment manager. Brett is doing great and now has taken over all the trading duties and creating the investment reviews. He is also writing newsletters – see his latest below. He will also handle most of the client questions and be in all the client meetings. Tim’s role going forward is to be the wise sage we all know and adore. He will be a resource to Brett and continue to pass down his knowledge about client portfolios. He will also help with dedicated investment meetings and continue as our compliance officer.

The next announcement – we are in process of scheduling the annual shred party. We are hoping the heat subsides soon, and our goal is to have something on the calendar by the end of October.

Thanks as always for allowing us to have jobs we love. We are happy to answer any questions.

Is Cash King?

By Brett Lozowski

The Federal Reserve concluded their July meeting by raising rates to the highest level in 22 years. Many of you have started to see the effects of the higher rates for bonds and cash accounts. With Fidelity’s cash account paying almost 5%, is it true that cash is king in portfolios?

To answer this question, we must revisit the role of cash in portfolios. Cash plays an important role in providing liquidity for regular monthly expenses and emergency expenses. Cash can also provide stability and earn interest for short term financial goals. 

With cash providing stability and higher yields, many of you may be wondering why we do not allocate more of your fixed income or portfolio’s allocation to cash. The opportunity to earn almost 5% on cash is attractive; however, it is not the only fixed income option and high interest rates certainly won’t last forever.

Higher interest rates have created the opportunity to lock in rates for longer with individual bonds. Bond funds present a similar narrative. Bond funds have benefited from a higher interest rate environment by reinvesting in higher yielding bonds and steadily increasing monthly dividend payments to investors.

While we cannot predict when rates will go down, history shows that the Federal Reserve cuts interest rates faster than raising them. No one knows when rates will begin to decline, but when they do, you will certainly be glad that we locked in higher rates while they lasted. 

Being a native of New Orleans, this Cajun phrase comes to mind - Laissez les bons temps rouler, which means let the good times roll. This best sums up our stance on the higher rate environment - we should simply appreciate the higher yields while we have them and understand they won’t last forever. Remember it was only 3 years ago when rates were near zero! By locking in on some longer-term bonds, we can enjoy the party now, and continue enjoying it long past an interest rate decline.