Why some Oregonians should still consider fixed income
Over long periods of time, stocks have historically delivered higher returns than bonds. That is well established in financial research. But building a portfolio is not just about maximizing returns.
Fixed Income- The Pros
Potential Behavioral Advantages of Fixed Income Investments
Helps you stay invested during market downturns. When part of your portfolio is stable, it may become easier to avoid emotional decisions like selling stocks at the wrong time.
Reduces stress and “portfolio anxiety”.
Knowing that a portion of your money is designed to be steady may allow you to take appropriate risk elsewhere such as long-term growth in an equity sleeve.
Provides clarity around long-term vs. near-term spending. When upcoming expenses are covered by less historically volatile assets, you may be less likely to worry about market timing. This may allow you focus on the bigger picture rather than short-term market noise.
Fixed income is commonly used to:
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Manage volatility
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Support withdrawals in retirement
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Preserve capital during downturns
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Provide flexibility when markets become unpredictable
For many Oregon retirees and pre-retirees, fixed income plays a critical role in making a financial plan actually work in real life, not just on paper.
Oregon's Tax Structure Impacts Fixed Income Use
Oregon State income taxes may significantly impact after-tax yield. What looks attractive on paper may be less compelling once Oregon state taxes are applied.
The goal may not be the highest rate. Focusing on income after taxes may provide consistency, predictability, and tax efficiency which may be more important than chasing yield.
Oregon does not have a separate long-term capital gains tax rate. This means long-term gains are taxed as ordinary income at state rates, which can be as high as 9.9%. Short-term capital gains are also taxed as ordinary income in Oregon, making tax efficiency an important consideration.
How Much Fixed Income Should You Have?
There is no one-size-fits-all answer. The right amount of fixed income depends on your situation, that's where financial planning comes in.
At T. Mann Financial we typically look at:
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How soon you will need the money
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Whether you are withdrawing income aready
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Your tax situation in Oregon
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Your comfort with market volatility
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Other income sources like Social Security or pensions
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Your long-term goals for growth
Key idea:
Fixed income is not a percentage decision.
It is a planning decision.
Building Portfolios with an Income Focus
Not every income strategy needs the same level of customization. Some solutions are simple and automated. Others are more hands-on, tax-aware, and tailored to a client’s specific goals, cash flow needs, and risk profile.
T. Mann Financial: Growth
Automatic, simple, low-cost income exposure
Growth-level income solutions are built for simplicity, broad diversification, and minimal ongoing maintenance, making them a practical fit for investors who want fixed income exposure built into an all-in-one portfolio
Target Date Funds / Lifecycle Funds
An all-in-one fund that automatically adjusts the mix of stocks and bonds over time based on a target retirement year.
Pros
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Extremely simple and easy to maintain
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Built-in diversification across stocks and bonds
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Typically low cost and highly automated
Cons
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One-size-fits-most rather than highly personalized
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Limited tax customization
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Little control over the specific income holdings
T. Mann Financial: Bronze
Flexible building blocks for practical income planning
Bronze-level solutions offer more flexibility and more intentional income design, while still using relatively accessible, scalable, and easy-to-implement tools.
Income Focused ETFs and Index Funds
Exchange-traded funds that provide diversified exposure to baskets of bonds in a low-cost, liquid format.
Pros
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Broad diversification in one position
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Generally low cost and easy to trade
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Useful for building income sleeves quickly
Cons
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Market value fluctuates daily
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Income can fluctuate with market conditions
Income and Liquidity Sleeves
A dedicated allocation to an income or liquidity focused investment such as U.S. Treasuries, TIPSm CDs, Money Markets, FICA Accounts, etc.
Pros
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High credit quality
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Straightforward and easy to understand
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Can add stability to a broader portfolio
Cons
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Interest rate sensitivity can still be significant
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Historically lower yields vs. other investments
Insurance-Based Income Suppliments
Insurance-based solutions designed to provide income, principal protection, and or tax-deferred growth through contract-based guarantees, including annuities and permanent life insurance structures.
Pros
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Can provide contractual guarantees
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Tax-deferred growth
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May provide stability and predictability
Cons
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Interest rate sensitivity can still be significant
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Historically lower yields vs. other investments
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Fees and internal costs can be higher
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Effectiveness depends heavily on product design and use case
T. Mann Financial: Silver
More customization, more tax awareness, more precision
Silver-level income solutions provide a more tailored approach, giving clients greater control over maturity structure, tax treatment, and downside management.
Individual Bond Holdings
Direct ownership of specific bonds selected for a client’s time horizon, income needs, tax situation, and risk tolerance.
Pros
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More control over maturity and credit exposure
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Can be tailored to income & tax goals
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Clearer connection between holdings and planning objectives
Cons
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Requires more oversight and trading work
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Diversification can be harder at smaller account sizes
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Bond selection risk is higher than with broad funds
Fixed Income Ladders
A series of fixed income securities such as treasuries, corporate bonds, and or CDs with staggered maturities designed to create planned liquidity and recurring income opportunities.
Pros
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Highly transparent structure
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Can match future spending needs
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High credit quality and defined maturities
Cons
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Takes more work to build and maintain
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Reinvestment risk still exists
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Less flexible than a simple bond fund
Buffered ETFs
ETFs designed to provide partial downside protection over a defined period, typically in exchange for a capped upside.
Pros
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Can help manage downside risk
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Useful for clients seeking defined outcomes
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May fit cautious income or near-retirement planning
Cons
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Upside is limited
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Outcome depends on when the ETF is purchased
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More complex than traditional ETFs
T. Mann Financial: Gold
Highly tailored, tax-focused, advanced income design
Gold-level income solutions are designed for accredited investors with more complex needs, where tax efficiency, customization, alternative income sources, and precise portfolio engineering matter most.
Structured Notes
*This example is for illustrative purposes and is not an offer
Customized note-based solutions designed around specific market outcomes, income goals, downside buffers, or return objectives.
Pros
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Can be tailored to a very specific need
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Useful for defined-outcome planning
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May create unique risk-return profiles not available in standard funds
Cons
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Complex and harder for clients to evaluate
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Liquidity can be limited
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Adds due diligence and suitability exposure
Alternative Investments
These strategies are often used to pursue diversification, income, inflation protection, or non-correlated returns within a broader portfolio. They are a diverse group of non-traditional investments that extend beyond public stocks and bonds, including:
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Real estate structures like Delaware Statutory Trusts (DSTs) and UREITs
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Private markets such as private equity, private debt, and venture capital
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Specialized strategies like hedge funds, managed futures, commodities, infrastructure, and derivatives.
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Energy-related investments such as oil and natural gas programs, mineral rights, and drilling partnerships, as well as opportunity zone investments.
Pros
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Potential for enhanced diversification and non-correlated returns
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Access to specialized strategies and private market opportunities
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May provide income, inflation hedging, or tax-advantaged structures
Cons
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Typically less liquid with longer investment time horizons
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Higher complexity, due diligence requirements, and varying transparency
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Fees, risks, and outcomes can vary significantly by strategy and manager
