Vista Financial Advisors

Investing in Tomorrow. Today.
Vista's Investment Strategies

Fixed Income

This investment strategy, made up primarily of bonds and CDs, is the typical investment of choice for investors seeking income and safety.  Fixed Income also constitutes a separate “catalyst group.” The primary catalysts for these investments are the movements in interest rates and credit quality concerns.  Interestingly, many portfolios are considered “safe” only because they are largely invested in bonds.

Put simply, the good times will take care of themselves, and the vast majority of your investments will perform well.  You want and need a portfolio that will perform for you equally well in the “not so good” times as well as in the truly “bad times.” Should the economy enter a prolonged period of decline, the interest earned on bonds may not provide a sufficient return for your needs. In severe cases, many bonds simply might not pay-off –and we have seen those periods in history.

Based on history, we know the mistake of depending solely on bonds to provide the safety and income you need could well be a fatal one. Increases in interest rates can greatly reduce the market value of your bonds, should you own medium- and/or long-term bonds. Most investors are not aware that a one-percentage-point increase in interest rates could decrease the market value of their long-term bonds by 12% to 15%.  The reality associated with a bond is that, if inflation persists (and few believe it will not), the value of your funds at maturity will buy far less than when you spent those dollars to buy the bond, and your interest checks will purchase less each year.