Generational wealth

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

The distribution of net worth in the United States is unbalanced. This can lead to many suppositions on how it may or may not affect current and future economic conditions. According to the US Census and Federal Reserve, people aged 55 and older represent roughly 30% of the US population, yet they hold 73% of the nation’s net worth. This means over $107 trillion in net worth is controlled by less than a third of the people, and they all have much in common. Generally speaking, they are in or near retirement, mostly empty nesters, and have already accumulated a great deal of their desired assets. Does this mean that this wealth is directed toward investments, or does the age of the owners suggest they are in the spending phase? Will a large percentage of this wealth be passed on to the next generation?

We will discuss generational wealth distribution, its relationship to the economy, and its potential influence on interest rates in a client webinar on Tuesday, August 12. If you are interested, your Raymond James financial advisor can provide you with the invitation to the Zoom webinar. We will also be releasing the Fixed Income Quarterly this week, which will concentrate on the generational wealth and net worth distribution as it relates to our economy. The following bullet points summarize the takeaways for these upcoming events.

• The current interest rate environment offers attractive earning potential in addition to helping preserve wealth. We consider it the “dual benefit” that currently exists in this market.
  • Will the Fed’s dual mandate of keeping stable prices and healthy employment affect interest rate policy?
  • Can the disproportionate distribution of wealth affect interest rates?
• Each investor embraces a unique financial situation. Your financial advisor can provide financial solutions that embrace these distinctions.
  • Which generational bucket do you fall into?
• How does this match with your personal financial journey.
• Explore fixed income ideas given the current economic conditions.

There are plenty of opinions on how the economy will transform over the next year, with many different views, yet each plausible. This elevated interest rate environment provides a good opportunity for investors. No one solution fits all investors, so find the appropriate strategy for you.

The author of this material is a Trader in the Fixed Income Department of Raymond James & Associates (RJA), and is not an Analyst. Any opinions expressed may differ from opinions expressed by other departments of RJA, including our Equity Research Department, and are subject to change without notice. The data and information contained herein was obtained from sources considered to be reliable, but RJA does not guarantee its accuracy and/or completeness. Neither the information nor any opinions expressed constitute a solicitation for the purchase or sale of any security referred to herein. This material may include analysis of sectors, securities and/or derivatives that RJA may have positions, long or short, held proprietarily. RJA or its affiliates may execute transactions which may not be consistent with the report’s conclusions. RJA may also have performed investment banking services for the issuers of such securities. Investors should discuss the risks inherent in bonds with their Raymond James Financial Advisor. Risks include, but are not limited to, changes in interest rates, liquidity, credit quality, volatility, and duration. Past performance is no assurance of future results.

Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value.

To learn more about the risks and rewards of investing in fixed income, access the Financial Industry Regulatory Authority’s website at finra.org/investors/learn-to-invest/types-investments/bonds and the Municipal Securities Rulemaking Board’s (MSRB) Electronic Municipal Market Access System (EMMA) at emma.msrb.org.