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Are you getting your moneys worth when it comes to investment advice?

Posted by Larry Jones on Mar 22, 2018 9:30:00 AM
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Do you remember how you felt in 2008 watching your investment portfolio decline?

Most folks do. It wasn't a happy time, especially for retirees. Many saw their portfolio's go south as much as half it's value! 

Why do we do this to ourselves?

Is this the only way to grow assets and have security during retirement? Absolutely not!

I'm always amazed when I meet folks in their 70's and 80's who still have 80% of their portfolio in high risk stocks. Inevitably, they tell me, "well, where else am I going to get growth?" I'd like to go on record here and now by saying that, in my opinion, a 70 year old retiree needs to be more concerned with income than growth. That's why my first goal, if possible, is to reproduce the income you had when you were working in a guaranteed income stream that isn't dependent on the market, or subject to loss. That's happiness! Then, once that base is covered we'll try to grow the remainder, and perhaps take a little more risk. But the Wall Street system doesn't want you thinking that way.

Buy and Hold, Baby!

The entire Wall Street system is predicated on convincing folks to get in, and hang on no matter what. The market goes up....the market goes down. Get used to it. That's what we were taught. And if you're a young investor, that may be good advice because the element of risk does decline over 15-30 years. A person 20 years old who invests for 30 years and never gets out WILL make money.

But if you're 64 years old, and your portfolio which was worth $1 million in September is now worth $460,000 6 months later, do you have 8-10 years to wait for it to come back? Is buy aand hold the only way? Is it even wise? What if this same investor was 85? This kind of decline, coupled with a serious long-term care event could leave a millionaire family destitute and on Medicaid. Here's a couple of things to think about:

  • Do you know how much risk you have with your investments? The average investor above 60, I believe, is exposed to far too much risk. Yet he or she usually has no idea that they are. When doing portfolio reviews, it's very common to have folks describe themselves as very conservative, yet I find their broker has them in moderate to high risk investments. That leads to the next point.
  • How much are you paying your broker? Why? Again, many have no idea how much they're paying their broker, or what they're getting in return. The average investor pays around 1.2 to 1.7% on their portfolio. Yet, in 2008, the vast majority of portfolio losses almost exacly matched the S&P decline of nearly 55%! That means you are paying your broker to get exactly the same results you could have gotten by being in an unmanaged S&P index fund! Am I against broker fees? No, but you should get some value for them. If you have a $1 million portfolio, that means you are paying from $12,000 to $17,000 a year to get the same results you could have gotten by yourself for free. If you're paying for the management of your portfolio, you should see some management of your portfolio! 
  • After 2008, is your broker doing anything differently to protect you from such losses again? Have you discussed his strategy for protecting your nest-egg? If not, why not? Is this a buy and hold strategy, or hope-and-prayer? If he cannot articulate some type of defensive methodology for protecting you, that makes sense to you, and you're happy with, then I suggest you get a second opinion (Yes... I'm available).


Could the market really meltdown again?

Once again, I'm going to go out on a limb and suggest that since 2008 we've done very little systematically to keep the carnage from happening again. A look at financial markets worldwide, debt levels globally, and political instability doesn't do much to reassure me. 

Let's get together and do a free portfolio review, and let me show you our low-risk, low-volatility investment system, and how we've performed in down markets. What have you got to not lose?


Topics: Investment Advice in a volatile world

What you don't know can hurt you!

As a fiduciary I am required to always act in your best interests, and as a professional planner, it's my job to be familiar with all types of possible solutions and financial vehicles. In short, I have no interest in selling any particular product or any affiliation with a particular company. I work for my clients.

Are you:

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