The Columbia Press
February 5, 2021
7
Financial Focus
Senior Moments
with Adam Miller
with Emma Edwards
Shaking nuts from family tree With ultra-low rates, are bonds a good investment?
I have been on a long adven-
ture working on both sides of
my family genealogy.
Working on such a project,
as I suspect many of you have,
is revealing. I have learned
that every family tree produc-
es some lemons, some nuts
and a few bad apples.
I had my DNA taken two
times in the last few years and
I am working with three gene-
alogical organizations: Fam-
ilysearch.org, Ancestry.com,
and FamilyTreeDNA.com.
There are many other search
organizations and maybe some
of you have interacted with
them or become a member.
I suspect you’ve heard the
expression, “I’m having more
fun than a barrel of mon-
keys.” Well, that is the abso-
lute truth. Last week I learned
that my grandfather was born
in 1841 in Devonshire, En-
gland. Seventeen years later,
he came to our country with
two of his brothers and moved
their wholesale butcher com-
pany here.
He died in 1896 of pneu-
monia. My father was born in
1886, so he was only 10 years
old when his father died. I
never knew that.
I can’t help but wonder if los-
ing his father at such as young
age may have contributed to
my father’s troubled life as
he was the baby in a family of
seven children. It was a real
treat when I found an obit-
uary for the grandfather I’d
never been blessed to meet. In
the obit, he was described as
“well known both in the city
of Detroit and throughout the
state and had many friends.”
I even found my grandfa-
ther’s draft registration.
I share these details because
I want to encourage those of
you who have not searched
records for your family’s ori-
gins to do so during this time
of being homebound.
I ran into a cute cartoon the
other day of two little children
talking about their grand-
mother. One says, “When
Grandma was young, she had
to walk all the way to the TV to
change the channels.” Wow!
In my case, we didn’t have
a TV until I was almost out
of high school. On Wednes-
day evenings we went to the
neighbor’s home to watch
broadcaster Arthur Godfrey.
Hopefully, we will have a
bit of snow by the time this
column hits the newsstands,
which reminds me. I’m often
asked where a person can buy
this amazing news-filled War-
renton newspaper.
Well, for sure come Thurs-
day afternoon of every week
you will find the latest issue at
our local Main Street Market.
Even our gigantic Fred Mey-
er proudly carries a stack of
our local Columbia Press. It
can also be purchased at War-
renton Mini Mart, Warrenton
Community Library and The
UPS Store.
And not just because I am a
columnist, but I believe it is
the best buy for 50¢.
Oh, and it is available on-
line on a subscription basis.
Go to www.thecolumbiapress.
com to get an online subscrip-
tion or to have a copy mailed
to you. Call Publisher/Editor
Cindy Yingst at 503-861-3331
for any questions.
In the meantime, don’t tell
me you are bored ever again.
Even if you don’t have a com-
puter, head over to the library
and go to one of those gene-
alogy sites. Or call the Asto-
ria Mormon Church, which
has genealogy experts twice a
week who can assist you.
If you’ve been investing
for many years and you’ve
owned bonds, you’ve seen
some pretty big changes on
your financial statements.
In 2000, the average yield
on a 10-year U.S. Treasury
security was about 6 percent;
in 2010, it had dropped to
slightly over 3 percent. And,
for most of 2020, it was less
than 1 percent.
That’s an enormous differ-
ence, and it may lead you to
this question: With yields so
low on bonds, why should
you even consider them?
Of course, while the 10-year
Treasury note is an import-
ant benchmark, it doesn’t
represent the returns on any
bonds you could purchase.
Typically,
longer-term
bonds, such as those that ma-
ture in 20 or 30 years, pay
higher rates to account for
inflation and to reward you
for locking up your money for
many years.
But the same downward
trend can be seen in these
longer-term bonds, too. In
2020, the average 30-year
Treasury bond yield was only
slightly above 1.5 percent.
Among other things, these
numbers mean that investors
of 10 or 20 years ago could
have gotten some reasonably
good income from invest-
ment-grade bonds.
But today, the picture is dif-
ferent. (Higher-yield bonds,
sometimes known as “junk”
bonds, can offer more in-
come, but carry a higher risk
of default.)
Nonetheless, while rates are
low now, you may be able to
employ a strategy that can
help in any interest-rate en-
vironment. You can build a
bond “ladder” of individual
bonds that mature on differ-
ent dates.
When market interest rates
are low, you’ll still have your
longer-term bonds earning
higher yields (and long-term
yields, while fluctuating, are
expected to rise in the fu-
ture).
When interest rates rise,
your maturing bonds can
be reinvested at these new,
higher levels.
Be sure you evaluate wheth-
er a bond ladder and the se-
curities held within it are con-
sistent with your investment
objectives, risk tolerance and
financial circumstances.
Furthermore, bonds can
provide you with other ben-
efits. For one thing, they can
help diversify your portfo-
lio, especially if it’s heavily
weighted toward stocks.
Also, stock and bond prices
often move in opposite direc-
tions, so if the stock market
goes through a down period,
the value of your bonds may
rise. And bonds are usually
less volatile than stocks, so
they can have a “calming” ef-
fect on your portfolio.
Plus, if you hold your bonds
until maturity, you will get
your entire principal back
(providing the bond issu-
er doesn’t default, which is
generally unlikely if you own
investment-grade bonds), so
bond ownership gives you
a chance to preserve capital
while still investing.
But if the primary reason
you have owned bonds is
because of the income they
offer, you may have to look
elsewhere during periods of
ultra-low interest rates.
For example, you could
invest in dividend-paying
stocks.
Some stocks have long track
records of increasing divi-
dends, year after year, giving
you a potential source of ris-
ing income. (Keep in mind,
though, that dividends can be
increased, decreased or elim-
inated at any time.)
Just remember that stocks
are subject to greater risks
and market movements than
bonds.
Ultimately, while bonds
may not provide the income
they did a few years ago, they
can have a place in a long-
term investment strategy.
Consider how they might fit
into yours.
This article was written by
Edward Jones and submit-
ted by Adam Miller, financial
advisor at the Astoria office,
632A W. Marine Drive. To
reach him, call 503-325-7991.
Special columns in The Columbia Press
Every week: Senior Moments with Emma Edwards
Week 1: Financial Focus with Adam Miller
Week 2: Here’s to Your Health from CMH
Week 3: Off the Shelf by Kelly Knudsen
Last week: Mayor’s Message by Henry Balensifer