Wow, hate to say "I told you so", but I'd encourage everyone to take a look at last month's newsletter and see what we said about market volatility. Over the last few days, the Dow Jones Industrial Average has had quite the swing! And by the way, the Dow is the most stable of the market indices that most folks follow - being made up of the 30 largest mostly dividend paying stocks. Other indices have been even more volatile. This past week has been one crazy roller coaster ride to say the least. We've been saying for some time now that it would be wise to "take some profits off the table", before you lose them. Especially for senior citizens that don't have time to play the "hang in there / the market always comes back game". Folks, it's a true statement that markets always "come back" (or always have so far), but there have been plenty of times markets have crashed and it's taken 5, 10, 15, 20 years to recoup losses. And it could be even worse if you're drawing income from your invested accounts. Volatility is fine when you're 30 or 40, but not so much when you're 60 or 70.
So, here's my fiduciary professional opinion for whatever it's worth. DON'T GET GREEDY! Take some profits and protect your good fortune. I say it over and over again that as we get older, we need to get safer and place a focus on ensuring that we'll have enough guarantee income in retirement. We've had one heck of a run in the stock market. We've made in two years what we'd hope for in six or eight years of a good market. It's normal for the market to "correct", then start to rise again. But for us old folks, frankly that's a younger person's game because of time. It's so easy, yet greed and fear get in the way of good old fashion common sense. I keep preaching common-sense strategies for those who will listen. I'd encourage any reader who has any concerns about their portfolio to take us up on our risk analysis program called Riskalyze. It will determine your Risk Number, and we can compare your investments to see if they line up.
Also, here's an option that just came across my desk for those of you that are looking for guaranteed rates of return. One of our insurance providers just came out with a fixed annuity that pays a guaranteed rate of 3.25% for five years. Safe, guaranteed, tax deferred, not a bad deal.
Another strategy many have been using is that of the "safe growth" fixed index annuity. These past few years these products have had double digit returns in certain indexing strategies, on top of any applicable premium bonuses. The money is not exposed to market risk in these strategies, so your gains can't be wiped out by market volatility once they've been credited. Yes, annuities have surrender schedules, so it's a longer-term strategy, but it can be a good piece in an overall plan when used properly. They now build in liquidity features that are more than adequate, and in my opinion if you don't take the time to learn more about these alternative strategies, you are simply missing the boat.
In any event, if you're concerned about market volatility, or would like your own risk analysis & Chart Your Course Retirement Plan, then just give us a call or shoot us an email and we'd be happy to help you.