Holly’s Corner: “Coffee talk…”

I grew up with my parents who drank their coffee black. I can remember the delicious smell of the hot coffee I would get to pour for the driver on our long road trips from Texas to Iowa and then Florida to Iowa. And while I like the smell, it would be years later that I would enjoy a cup myself.

There seems to be a correlation between black coffee and bonds. In their simplest form they can be good for you and not too risky to invest in. We humans aren’t always content with simplicity. We want a slight edge to our portfolio a slight indulgence to our drink. So, we mix it up. We add extra calories. Milk… cow, oat, soy or pea. Sugar… cane, raw, stevia, Splenda syrup, caramel. We add extra risk. High yield bonds. AT1 bonds. Junk bonds.

And do they really serve their purpose in our portfolios. Most of us add bonds to offset the risk of stocks. And while squeezing out an extra 1%-2% return can feel super smart, how smart do you feel when the bonds go to zero? Just ask the former bond holders of Credit Suisse’s AT1’s. Today they might be back to brewing their own cup of coffee and skipping the grande soy caramel macchiato!

In moderation risk and calories are just fine… but compounded day after day they can produce excess weight and excess risks with unnerving results.

Holly Tyrrell is a wife, mother to Jack (11) and Luke (10) and Life Strategist with Legacy Trust Family Wealth Offices.  She loves making memories with family & friends, reading, working out, beach time, clean water, champagne, good food & Jesus.