Bonds may act as a steady anchor over a full market cycle

Tommi Harris, Financial Advisor


Here’s why they are worth considering.


There are two ways you may make money investing in bonds: appreciate in value over time and systematic interest payments. Lately, investors are forgetting about the latter.


Imagine stepping on board a large boat on a warm summer’s day, you realize it is both calming and exhilarating to be out in the open water for an extended period of time. However, the desire to cool off in the deep water becomes too irresistible, and you find yourself jumping into the water. The water wraps you up in a refreshing embrace, and you are lost in the moment. Soon after, you begin to notice that your boat is starting to drift away from you, and you find yourself stranded in the middle of the deep water. You realize you have to swim back to the boat with all your might, hoping you can reach it. Your heart begins to race, and soon you find yourself struggling to keep your head above the water. You wish you had decided to swim in shallower waters or had a more stable anchor to prevent the boat from drifting away. Ever feel this way when it comes to investing? When markets are good, it can be exhilarating, but when markets turn downward, you may wish you had a stable anchor to hold your portfolio in place.


With the aggressive Federal Reserve rate hike cycle over the past year and a half, bonds and cash have become more common topics within investment-related conversations. Here is what to consider when reviewing your own portfolio and the speed at which your investments are driving.


Diversified bonds as a segment of one’s portfolio may provide a stable anchor. Over a full market cycle, providing some diversification from other asset classes or segments during a heightened period of stock market volatility. Bonds are essentially loans made by the government, municipalities, or corporations, and when you invest in them, you become a creditor.


Three things that may be advantageous are…

  1. Income stream: Bonds offer regular interest payments creating a consistent income stream even in uncertain times and when the bond itself has depreciated. Consider it like an investment property. You purchase the house with the hopes the real estate market will appreciate over a long time period. Every once in a while the house may depreciate in value; just like a bond, its price may fluctuate. The second way you hope to make money when buying a house as a rental property is through a tenant paying rent each month; this is similar to a bond, by receiving systematic interest payments.
  2. Capital Preservation: Bonds are generally less volatile than stocks over a long period of time, such as in 2022, which was during an extreme period of interest rate hikes.
  3. Diversification: Including bonds in your portfolio diversifies risk, especially if the bond itself has a negative correlation to the stock segment or other asset classes within the portfolio.


High-yielding money market accounts and the temptation of liquidity. Money market accounts offer liquidity and higher interest rates compared to traditional savings accounts. They are often seen as a safe haven. When allocating the right amount of someone’s overall net worth to a money market account, a high-interest rate environment may be advantageous. However, any more than what is needed in ultra-short liquid accounts may not be the ideal choice for wealth building or preservation.


Here’s why you don’t want to over-allocate your net worth or liquid money into a high-yielding money market account.

  1. Limited growth potential: Money market accounts provide liquidity. While we can all agree it is important to have funds in a liquid account, they offer limited growth potential compared to bonds, which typically yield higher returns than cash over time.
  2. Inflation erosion: When interest rates rise, even a high-yielding savings account will have a hard time keeping pace with inflation. Also, the real purchasing power of money market funds can diminish over time.
  3. Opportunity cost: Opting for money market accounts alone may result in missed opportunities for long-term wealth generation.


When aiming to maximize wealth, there are various options worth exploring, including diversified bonds, money market accounts, or CDs. Although diversified bonds can yield higher returns over time, they also entail some degree of risk. Conversely, money market accounts and CDs typically offer lower returns but are considered to be safer choices. Ultimately, the optimal selection for you will depend on your unique financial objectives, risk tolerance, and investment timeline. It is worth seeking advice from a Verde financial advisor to determine the most suitable investment strategy.


Remember the key to successful wealth management lies in striking the right balance between safety and growth. Speak with your Verde advisor to tailor a strategy that aligns with your unique financial goals and risk appetite.

Verde Capital Management, Inc. is a federally registered investment adviser. The information, statements and opinions expressed in this graphic and email are provided for general information only, are based on data we believe to be accurate at the time of writing, and are subject to change without notice. This material does not take into account your particular investment objectives, financial situation or needs, is not intended as a recommendation to purchase or sell any security, and is not intended as individual or specific advice. Investing involves risk and possible loss of principal capital. Diversification does not ensure a profit or protect against a loss. Past performance is not indicative of future returns. Advisory services are only offered to clients or prospective clients where Verde Capital Management, Inc. and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Verde Capital Management, Inc. unless a client service agreement is in place.

How Do I Improve My Credit Score?

Your credit score is a vital financial tool that plays a significant role in your life. It influences your ability to secure loans, credit cards, and favorable interest rates. Whether you’re planning to buy a home, start a business, or simply want to have better financial opportunities, improving your credit score is a smart move. In this blog post, we’ll delve into actionable steps you can take to boost your credit score and pave the way for a brighter financial future.


Establishing Credit

If you have no credit history and are trying to establish credit, you may find the process quite frustrating. Check out options like where you can get approved for credit without any history using alternative methods like income, fixed expenses, and assets.

Be sure to check out This credit bureau will show everything that is affecting your credit score and how to improve it. They have a feature called Experian Boost that will pull in your bank accounts or credit cards and find any bills that could be reported to the credit bureau. If they are not currently being reported, Experian will report them for you in an effort to provide you with credit history.

Understanding Your Credit Score

Before diving into the strategies to improve your credit score, it’s essential to understand what it is and how it’s calculated. A credit score is a number which represents your creditworthiness based on your credit history. The most widely used scoring model is the FICO score, which ranges from 300 to 850. The higher your score, the better your creditworthiness.

Factors that influence your credit score include:

  1. Payment History: Your record of making on-time payments on loans and credit accounts.
  2. Credit Utilization: The ratio of your credit card balances to your credit limits.
  3. Length of Credit History: How long your credit accounts have been active.
  4. Types of Credit: The various types of credit accounts you have, such as credit cards, mortgages, and installment loans.
  5. New Credit: The number of recent credit inquiries and newly opened accounts.

Now that you have a better grasp of what constitutes your credit score, let’s explore ways to improve it.

  1. Pay Your Bills on Time

Consistently paying your bills on time is one of the most crucial steps in improving your credit score. Set up reminders, automate payments, and establish a budget to ensure you never miss a due date. Payment history carries significant weight in determining your credit score, so make it a priority to be punctual.

  1. Reduce Credit Card Balances

High credit card balances relative to your credit limits can negatively impact your credit score. Aim to keep your credit utilization ratio below 30%. Paying down credit card debt can have a swift and positive effect on your score.

  1. Avoid Opening Unnecessary Accounts

While having a mix of credit types is beneficial, opening new credit accounts frequently can be detrimental to your credit score. Each credit inquiry can cause a small dip in your score, and opening new accounts may shorten your average account age. Be selective when applying for new credit.

  1. Maintain a Diverse Mix of Credit

Having a diverse range of credit types, such as credit cards, installment loans, and mortgages, can demonstrate your ability to manage different financial responsibilities. However, only take on credit you can manage responsibly.

  1. Regularly Review Your Credit Report

Obtain free copies of your credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) annually. Review them for errors, inaccuracies, or fraudulent activity. Disputing and rectifying any mistakes can positively impact your score.

  1. Settle Delinquent Accounts

If you have past-due accounts, work to settle them. Negotiate with creditors to establish payment plans or settlements, which can help improve your payment history over time.

There are many tools and apps available to help you monitor and improve your credit score. Be careful about signing up for paid subscriptions – make sure you’re not paying for a service that you can otherwise get for free. Check out resources like Nerd Wallet for reputable apps and credit card programs that may help you build up your credit score.

Improving your credit score takes time and consistent effort, but the long-term financial benefits are well worth it. By following these actionable steps, you can take control of your creditworthiness, open doors to better financial opportunities, and secure a stronger foundation for your future financial endeavors. Remember that improving your credit score is a journey, so stay patient and committed to your financial goals!