Financial security is important, no matter what your age. But for adults 55 and older, risk becomes more of an issue. These folks often can't recover from losses as well as a younger person with more earning years ahead.
Maybe you're retired and looking for income or are still saving for retirement. Living independently, maintaining good health and being able to feel secure all have a financial component.
In any case, say Walla Walla financial experts, you want investments that will give you positive growth with manageable or low risk. You simply don't want your money to run out in your "golden years."
"The people that are hurt the most are the fixed income people, usually older, with low rates on savings, CDs, bonds, even government bonds," said Chris Avey, founder of the Avey Group Wealth Management.
"Those that don't want to take a lot of risk are being punished for it. There are a lot more people in cash than we're comfortable with."
Said Brian Hearden, financial adviser with Raymond James financial planning at Banner Bank: "Our concerns are where the rates are, it's bad enough that you're not making a lot of money.
"There's something called the 'real economic rate of return.' You take the yield on the CD or bond, subtract inflation then subtract taxes. If the interest is 2 percent, inflation is 3 and taxes are 1, you're getting a negative real rate of return.
"A lot of people need 4 or 5 percent," he added.
"If your money is stashed away in the mattress, you're losing money every day." Hearden said. "That leads some people to take measured risks to keep up purchasing power and try to get ahead economically. Of course you have to talk about suitability with your financial adviser because everyone's situation is different."
Another factor in the mix is the expected ending this month of the Federal Reserve's second round of quantitative easing, called QE2, which began in November. In the program, the Fed pledged to buy $600 billion worth of treasury bonds as stimulus to keep interest rates low and prod lending and economic growth.
"What has been happening is the Fed has been buying treasury bonds, because by buying bonds they want to keep yields low," Hearden said. "Right now the 10-year is around 3.3 percent."
He expressed some concern that in five years the general public and other governments won't buy new bond issues. He's also looking at interest rates potentially going up after June.
"That will affect all other bonds. When the yield goes up, the value tends to go down," Hearden said. "Older people tend to not want to be in the stock market and annuities are too long term. There's a little more risk."
What Hearden said he likes is utility bonds with companies that have a long stable track record of making their interest payments, "bonds that have a short or no time commitment to them."
"You can buy them now and sell it in three months if you want with a minimal interest rate rise," he said. "If we have rising interest rates, be careful."
With regard to potential inflation, Avey said there have been some signals it will go up in "maybe a year or year-and-a-half."
"But with interest rates," he added, "if your CD is getting 4 percent, it looks good on your statement but your real rate of return is still near zero. Right now equities have less risk."
For older people, savings are important as far as cash flow, Avey said. "I see people working on how to get that cash distribution started. Most of them have the concept of not getting into the principal and right now that is hard to do."
Currently he is working with many clients on Social Security planning, such as when to start receiving payments and how to go about it.
"For example if you have a $50,000 CD you might be considering only where to get the best interest rates for another CD," he said. "It might be the best place for it or not."
Both Avey and Hearden suggest people consider their whole portfolio and overall situation, and recommend talking an advisor about overall rather than specific risks.
Still, people need to feel comfortable with the level of risk in their investments. It's about striking a comfortable balance between risk and reward.
Karlene Ponti can be reached at 509-526-8324 or firstname.lastname@example.org