Unlocking Opportunity, Mitigating Risk, Maximizing Returns
Linda's deferred compensation, while a substantial asset, carries inherent risk. She needs to strategically invest it to generate income, preserve capital, and navigate the complexities of interest rate fluctuations and credit risk associated with corporate bonds. Furthermore, as a blended family, estate planning considerations add another layer of complexity to investment decisions.
By utilizing the Credit Spread Calculator, we can assess the risk-reward profile of various corporate bonds and determine the optimal allocation for Linda's portfolio. For example, a bond yielding 5% with a credit spread of 150 basis points above a comparable Treasury might be deemed acceptable after considering Linda's risk tolerance and income needs, compared to one yielding 4% with a smaller spread. This ensures she’s adequately compensated for taking on additional credit risk with her fixed income investments, generating an estimated income of $75,000 annually.
The Credit Spread Calculator assists in comparing yields between corporate bonds and comparable risk-free Treasury bonds. Results are analyzed in conjunction with Linda's risk tolerance to build a diversified and stable portfolio.
$30,000 increase in annual income by optimizing bond selection and mitigating risk, enhancing Linda's overall financial security.
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