Issue 43.11
While the market experts, economists, rating agencies, politicians and the talking heads continuously debate the financial and political issues facing our country and the world, the individual investor needs to stand strong.
To stand strong, you need to embrace some specific rules of engagement to include:
• Maintain a long-term focus,
• Continue broad portfolio diversification,
• Keep emotions out of the investment decision making process, and
• Do not allow short-term events to derail the long-term comprehensive financial plan.
The volatile markets experienced over the past four years are testing everyone’s financial plan and their resolve to stay with it. If the plan is well-designed and properly diversified, it will deliver you safely to your financial destination regardless of the turmoil in the markets.
In this challenging market, it is important to be educated on the best options available. For many, protecting hard earned assets is the most important component of the financial plan right now. Predicting the next twist and turn in this volatile market is futile. The best strategy is to build a diversified portfolio suited for your personal objectives and risk tolerance. Investors at or near retirement age can’t simply wait for markets to eventually recover. Their time horizon doesn’t support that type of strategy. In a 2008 article published by AARP, Martin D. Weiss, president of Weiss Research and editor of Safe Money Report Newsletter states, “The reality is that bear markets can last for years. And during all those years, your money is dead in the water.”
With the negative press in the news about the market and the current interest rate environment, there is plenty of confusion over what to do with money marked for retirement.
In an article published August 9 by AARP, there are seven good moves to make during a market slump. Number two on the list is “Go look at the statements for your bank CDs, or your fixed annuity statements, or your bond funds. They made money today. Congratulate yourself for being so smart as to own some.”
Fixed annuities are safe instruments that can guarantee* that you will preserve your principal, no matter how severe the market downturn, provide a steady income stream during retirement, and potentially protect the asset from creditors and probate. Mark Twain once said “I am more concerned with the return of my money than the return on my money.” Based on the recent market conditions, truer words have never been spoken.
David D. Polatis, CEP can be reached at Senior Advantage 435-986-9222.