What's in store for you:

1. Photo From My Life
2. Financial Thought: Cat Bonds
3. Life Thought: Half Marathon
4. Good Sh*t: 85% Cacao Chocolate Chips:

Photo From My Life:

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Financial Thought:

Cat Bonds: One of the things I enjoy most about having a small number of clients is that I can actually spend a lot of time and customize portfolios around what each person needs.

I recently started working with a client who is more focused on generating income from their portfolio. Because of that, I’ve been going down a rabbit hole researching different investments that can generate attractive income without simply adding more stock market risk.

One of the more interesting areas I’ve been researching is Cat Bonds. No, these have nothing to do with cats.

Cat is short for catastrophe. Cat bonds are investments designed to help insurance and reinsurance companies protect themselves against massive disasters like hurricanes and earthquakes.

Here's a simple example of how they work.

1. An insurance company has billions of dollars of exposure to Florida homes.
2. A massive hurricane could create an enormous amount of claims all at once.
3. Instead of keeping all of that risk themselves, they can transfer some of it to investors through a Cat bond.
4. The investor earns an attractive interest rate for taking that risk. If there isn’t a qualifying catastrophe, the investor gets their money back at maturity.
5. If a predefined catastrophe does happen and losses cross certain thresholds, the investor can lose some or all of their principal.

Why would anyone invest in this?

Because you’re being paid to take a risk that’s very different from the normal risks in a portfolio. The S&P 500 doesn’t really care if a Category 5 hurricane hits Florida.

They can potentially generate attractive income while providing diversification from stocks, bonds, and other traditional investments. Right now, yields vary between 7-10%.

Of course, there’s no free lunch. The yields are higher for a reason. These investments can lose money. They’re complex. They’re not particularly liquid. And it's challenging to understand exactly what risks you’re taking.

To be clear, I don't think most investors should own something like this. But, for the right investor who wants income, has enough liquidity elsewhere, and is comfortable allocating a small portion of their portfolio to something more unique, I think they’re a pretty interesting product.

I’m not sure this strategy will ultimately make it into this client's portfolio, but that's all part of the process.

Life Thought:

Half Marathon: I’ve always said VandenBergs aren’t runners. I’m not sure where this belief came from, but I’ve repeated it enough times that I’ve accepted it as fact. We can ski. We can play tennis. But, I've never heard a family story about anyone running. It's just not our thing.

Well, somehow I got tricked into signing up for a half marathon. I’m not going to lie. I’m scared.

But, you may have noticed that I've done a few time-bound fitness challenges over the last year. I love having something difficult on the calendar that forces me to be uncomfortable for a specific period of time. Earlier this year, I did 30 straight days of cold plunges. I also did 100 push ups a day for 100 days.

Both were great experiences. This running experience hasn't been fun.

Maybe I’ll eventually become one of those people who talks about a runner’s high, but I'm still waiting for my first amazing experience at mile 4. Most of my runs involve me staring at my phone wondering how I’ve only been running for 11 minutes.

It also doesn’t help that I’m training in Savannah. The humidity here is brutal. I’ll walk outside at 6am and somehow start sweating before I’ve even started running.

But, despite how much I complain about it, I’m starting to appreciate the challenge. I want to be healthier. I want to prove to myself that I can do things I’m not naturally good at.

Will I become a lifelong runner after this? Absolutely not.

Good Sh*t:

85% Cacao Chocolate Chips: I had a summer of gluttony. Ice cream, cookies, pie, and the list could go on. I have zero regrets, but I’m attempting to get back into a healthier groove this fall.

The problem is that I still love dessert and have absolutely no interest in giving up chocolate. I’ve recently been buying Pascha’s 85% and 100% cacao chocolate chips. The 85% chips only have a small amount of sugar and the 100% have no sugar added.

I’ll grab a handful after dinner when I want something sweet or melt them on a banana for a real treat. Is it the same as a piece of Great Lake's Mixed Berry Pie with a Crumb topping? No, it's not. Which is why I'll never have a 6-pack.

Disclaimer: VDB Wealth is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.

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