War! What's Safe Now: Cash, Bonds Or Stocks? (By Age)

War is raging in the Middle East: what's safe now & how might you want to invest depending on your age?

Transcript

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War is raging in the Middle East. How might you want to invest right now, depending on your age? Hello, Diamondestic Members, Super Savers and Course fans, I hope you're healthy and well. So, oil prices have almost doubled since the beginning of the year. To be precise, they were up 94.25% at the time of this taping at market close on April 3rd, 2026. And as long as the Strait of Hermuz remains closed for shipping, it may be hard to see how oil prices might come down again sharply, which makes many investors nervous about inflation going up again and maybe even the US economy going into a recession. One would assume that this would have a significant impact on markets, right? Except that when we look at the SP 500, there's almost nothing to see there. Yes, volatility has gone up. The VIX, a measurement of how much investors expect markets to move, has gone up sharply, but the actual SP 500 is only down 3.84% versus the beginning of this year. There wasn't even a real short dip when the conflict first started, contrary to what many were expecting. So that was equities. Let's move on to bonds now. The yields on treasuries have gone up since their lows at the end of February, but overall they're roughly in the same range as at the beginning of the year for both the very short and very long maturities. Now, yields are up more for the middle maturities like the two year, the three year, and the five year, and even the one year and the seven year. What we refer to here at Diamond Nesteg as the dip in the middle has essentially straightened out, and what we have now is a more or less normal upward sloping yield curve again, as you can see here. Meaning that the longer you lend your money out to the government, the higher your interest payments will generally be. And as our Diamond Nesteg regulars know, a normal upward sloping yield curve is generally associated with good times ahead. Whereas an inverted yield curve, as we most evidently experience between 2022 and 2024, is typically associated with bad times ahead. An inverted yield curve means that the longer you lend your money out to the government, the less your interest payments will generally be. This is often seen as a predictor of a potential recession. And for those of you interested in annuities, rates on many multi-year guaranteed annuities, mygas, from some of the top-rated, meaning safest insurance companies are also up from where they started the year. At the time of this taping, for a$100,000 investment, you may be able to get 3.4% for a two-year mica, 4.35% for a three-year and four-year mica, four point six five percent for a five-year and six-year mica, and even four point seven percent for a seven-year mica. And as always, shoot us an email at jenniferdiamon essay.com if you're interested in seeing what annuity rates and payouts look like at the time that you're watching this video. So it is a bit difficult to make sense of it all. On the one hand, oil prices are sharply up, threatening us with potentially higher inflation and maybe even a sharp economic downturn. But at the same time, equity markets have stayed sanguine so far, while treasury yields and annuity rates might even display a potentially positive signal with their normal upward sloping yield curve. Given these conflicting signals, it's no surprise then that our community and investors in general are somewhat torn as well. Many are worried about their savings and wondering where they could find a safe haven in turbulent times, while some are more adventurous and looking out for potential opportunities for some cheap assets to buy when the cannons are thundering, as the saying goes. Now, we don't have a crystal ball here at Diamond Nest Egg, and no one can predict the future. And events are moving fast currently. So what was true at the time of this taping on April 3rd, 2026 might have completely changed by the time you watch this video. But what we can do is to give you our personal opinion on which strategies you might want to potentially consider, depending on which stage you're at on your financial journey. This may give you a basis to decide for yourself what to do with your money currently based on your individual circumstances, goals, and expectations. So with that in mind, here are the three questions that we'll be discussing in today's video. How might you want to invest if one you're several decades away from retirement? Two, you're five to ten years away from retirement, and three, you're about to retire or already in retirement. Let's dive in now, folks. How might you want to invest if you're several decades away from retirement? Let's start with the first group of savers, those who are several decades away from retirement. If this is you, growth should generally be your priority, and you may want to consider staying in the stock market despite the current war and general uncertainty. And if you're already doing so and have the means to continue, you should ideally do this via stable amounts at regular intervals, a method that the industry calls dollar cost averaging. Even if the market turns south, at this stage of your life, you should have a long enough time horizon to wait out even a real bear market. On the other hand, if you were to exit all your stock positions out of fear of a downturn, you might miss out on the upside of the stock market when it comes. Let's look at what I mean by taking the lost decade of the early 2000s as an example on this market crash timeline that was initially developed by Paul Kaplan from Morningstar. As our Diamond Neste Gregglars know, Marcus and I both lived through this one. We were in our 20s and 30s back then, still young and fresh in our career, so to speak, putting money into our retirement accounts with every paycheck, regardless of whether the market went up or down. So when the internet bubble of 2000 and then the great financial crisis of 2008-2009 hit in close succession, it was painful to see our portfolios in the red much of that time, and equally painful to see basically no organic growth in our portfolio for 13 years. And yes, it took the stock market until May 2013 before it reached the previous high from August 2000 again for good. But we knew that we didn't need that money anytime soon. The retirement was very, very far away. And we also expected that eventually, at some point, the market would go back up again. So we just kept dollar cost averaging into it. And let's just say it took a bit longer than we expected, but this strategy of riding the wave down and then riding the wave all the way back up and beyond, it has worked out okay for us in the end, at least so far. And one more observation: what Kaplan's chart also shows us is that after these long bad periods, when the market goes up eventually, it goes up quickly and steeply, like here and here, as well as here and here. It's basically near impossible to time when these upward spikes will happen. If we take the almost 96 years from August 1st, 1929 to December 31st, 2025, there were a total of 35,216 days, of which approximately 25,624 were days in bear markets. That means that over this 96 year period, investors spent 72.8% of their time in bear markets. What this also means is that unless you can figure out in advance the 27.2% of the time during this period when the market was outside of bear market territory and generally skyrocketing upwards, it may be wiser and easier to simply stay invested through the ups and downs if you have a long enough time horizon and risk appetite for it. Otherwise, you may miss the rapid spikes like these here that usually come after a period of bad market patches. So that was the first group of savers, those who are several decades away from retirement. And even though the lost decade was many years ago, this is still the group that Marcus and I would put ourselves in. Let's just say raising four kids in this country is not cheap. Let's talk about the second group of savers now. How might you want to invest if you're five to ten years away from retirement? The second group of savers are those who are five to ten years from retirement. This is a very special group because you're not so far away from retirement that you can just ride out a long extended market downturn. But you're also far enough away from retirement that you don't want to miss the next market pop upwards, and much of your decision on how to invest will depend on your outlook, risk profile, and how big your nest stake is, among many other factors. You need to know your numbers very well. So if this were me and Marcus, what we would do is to give ourselves a budget for staying in the market, but only after we figure out how much we would roughly need to cover our basic expenses and build out the principal and cash flow for that via a combination of safe treasuries, higher yielding bonds, and annuities. Fixed indexed annuities would be something that I would seriously consider here because they would allow us to protect our principal for retirement while at the same time giving us equity upside exposure up to a certain predefined cap. Check out this video here, link below if you want to learn more about fixed indexed annuities. Or email us at jenniferdimonestic.com to get connected with our trusted annuity specialist and see where rates currently stand. Now, if you're in the second group of savers and you like the principal protection and equity upside exposure that fixed index annuities provide up to a certain predefined cap, but you prefer something more liquid, then stay tuned because we'll have some more interesting options for you in future videos. Or if you have a specific investment idea that you're already considering and you want a second or third pair of eyes to have a look as well, then come join our private VIP investment community. Because that's what Marcus, our VIP members, and I talk about on a daily basis. If you're in the second group of savers or the third group, which we'll be getting to shortly, you should know that there are quite a number of relatively safe and or stable higher yielding income opportunities out there that you can mix and match within your portfolio once you've built the foundational pieces with safe treasuries, other types of bonds, and annuities. Visit our website at www.diamonestic.com and click on this yellow private VIP Investment Club button to learn more and join our member conversations. I've also linked everything below this video for your convenience. Let's keep going now with our next group of savers. How might you want to invest if you're about to retire or already in retirement? So our third group of savers, those who are about to retire, say in five or less years, or are already in retirement. Now, at this stage of your life, safety and income become much more important. And you may already have reduced your exposure to equities, for example, by following the general guidelines from our best model portfolios in our bond master's course and adjusting your balance between stocks and fixed income every year. But even if you already hold more bonds and annuities and have a solid basis, you should ask yourself three questions. One, am I comfortable with my remaining allocation to equities or should I reduce it even more? Now, we generally feel that some equities may often make sense in retirement as they may give you a bit of inflation protection and potential upside. But it's really up to you. And if the thought of a potential recession makes you lose sleep at night, you may just shift more of your money into safe bonds and annuities. Question two, am I expecting inflation to go up significantly and for a longer period? As our Diamond Nesteg regulars know, bonds and annuities excel for income, safety, and predictability. But they do not normally provide a good hedge against inflation. Now, any remaining real assets in your portfolio, such as equities or real estate, may help you mitigate the impact of rising prices. But if you feel that they might not be enough, you may want to shift a part of your fixed income portfolio into inflation protected bonds, such as TIPS and maybe I bonds. And if you're completely on the fence here, the Swenson rule proposes splitting your fixed income allocation 50-50 between inflation protected and non-inflation protected bonds. And question three Am I expecting a recession andor the Fed to bring down rates going forward? If your answer is yes and you've been considering going long on safe bonds, one option may be to start moving some of your cash, money market funds, and short-term bonds into longer dated safe bonds or annuities to lock in the current rates before they potentially come down. This might especially be something to consider if you're already in retirement and have no appetite to wait out a potential downturn in interest rates andor need the income. Again, this is not to say that higher inflation, a market downturn, recession, or worst case, a multi-year bear market are coming despite the current war in Iran and market uncertainty. No one can predict the future. And in the end, you need to decide what's right for you based on your personal situation. And of course, if you have enough money set aside to cover your regular living expenses and emergencies no matter what the markets do, then you may also want to just stay put. In this case, you could just continue hanging on to your dry powder, earning the current yields for as long as they last, and possibly scooping up some low-cost equities whenever the market hits a patch that looks like a buying opportunity for you. You could even look into other potential buying opportunities that may not be directly related to the Iran War, such as private credit and business development companies or BDCs, some of which are trading at substantial discounts to net asset value at the time of this taping, as markets discussed in our latest private credit mini series linked below for your convenience. This applies regardless of whether you fall into the first, second, or third group of savers, but it will depend on your risk profile, time horizon, level of product understanding, etc. But whichever group of savers you put yourself into, stay informed of what's going on. But don't panic. Continue to watch videos like this one on our channel. And come on over and join our private VIP investment club. Think of our VIP investment club as your personal retirement and investment community where you can get the level-headed, trusted answers you want, especially during times of uncertainty, either from me, Marcus, or other financially savvy and well-informed members who have a similar mindset. Remember, our Diamond Nestec VIP Investment Club is the ideal place for you if you want to one have an extra pair of eyes for critical investing questions. Two, get ready for the retirement decisions that lie ahead for yourself or a loved one. 3. Understand how a product works, its benefits, and its risks. 4. Be the first to know about safe and higher yielding investments. 5. Spot and clearly understand new market trends and issues. 6. Exchange perspectives with a like-minded community. And or seven, continue your lifelong learning about investing and retirement. If you fall into one, some or all of these categories, visit our website after this video at www.diamondnestic.com and click on this yellow private VIP Investment Club button to learn more and join our member discussions. I've also linked everything below this video for your convenience. Alright, Diamond Nestic Member Super Savers and Course fans, I hope you enjoyed today's video and learned something new. And see you very soon with more brand new, wealth-building content for your financial journey.