Black Enterprise Financial All-Star: Katrina H. Everett Talks Income Strategy

Black Enterprise talked to some of the top financial planners, investment advisers, real estate professionals, tax accountants, and insurance agents to get their best advice for your money. Over the next few weeks, BE will share their tips.

Financial All-Star: Katrina H. Everett

Everett’s Advice: It’s a good time to rethink your income strategy and prepare for rising interest rates. The Federal Reserve will begin tapering off its open-ended bond purchasing program (known as quantitative easing) and will inevitably push interest rates higher. As a result, it is a good idea to ensure that your portfolio is suitable and that your allocation is diversified and not over weighted in just bonds.

If you have a portfolio over weighted to fixed income investments with longer maturities and duration, you may be at risk of incurring a heavy loss to your portfolio when interest rates begin to rise. Investors should avoid chasing just yield, and reallocate the portfolio to focus on a “total return” perspective.

First, make sure you have sufficient liquidity in cash reserves in case of an emergency. Next, I suggest clients work with their advisor to reposition their portfolios and strive to achieve a total return that includes price appreciation plus dividend or interest income. Consider adding a rising Equity Dividend Strategy that will help investors who are seeking sustainable dividends, moderate dividend growth potential, and a yield that is higher than the current market index average. Ultimately, this strategy will help you prepare against rising interest rates, possible loss of principal, and purchasing power, while providing growth and a nice dividend income stream.

Stay tuned for more expert advice from our financial all-stars in the coming weeks.