Volatility and Investment Products

Things have become increasingly volatile in the markets and in headlines, despite the fact that in the not so distant past we were at all-time market highs. It may be tough to remember that right now, but we must try, so that we don’t make any rash investment decisions based on our emotions. Would you be shocked to learn that Large Cap Stocks, with dividends reinvested, which is how we invest, are actually positive for the year? You sure wouldn’t know it from watching CNBC or the nightly news. Yes, we have come down from those all-time market highs, some asset classes and individual stocks much more than others, but that is normal and expected. That is volatility and it is why we earn higher returns than by keeping our money in the bank. We are optimistic and we are LONG-TERM investors not short-term traders. We believe any missteps by the FED or the administration will be quickly corrected and asset prices will rise like they have throughout history.

In volatile markets like these you will be approached about investing in products that sound really good.  These products are sold using words and terms like principal protection, market buffers, and market participation with less downside risk. Those things all sound great, especially now, but the reality is the cost of placing your money in those products will far outweigh any upside. In the following article from the NY Times you will read about a reporter who tagged along with a family member to a steak dinner/seminar an annuity salesperson held and was pitched a product based on totally false information: https://www.nytimes.com/2018/11/30/your-money/retirement-annuities-steak-dinner.html.

In this Barron’s article: https://www.barrons.com/articles/structured-notes-can-new-etfs-make-them-actually-work-for-investors-1543612302, you will read about a new Exchange Traded Fund product that provides market participation with buffers, it also includes a quote on my personal feelings about this product. Spoiler alert, I am not a fan… Any time you protect against downside risk you also limit your upside gain. We are willing to do that through diversification, not through purchasing expensive products. These articles highlight why you hire a Certified Financial Planner as your Investment Advisor, it is their job as fiduciaries to act in your best interest and make sure that we are taking the best course of action to help you achieve your financial goals.

Here, we won’t allow our emotions, especially during volatile markets, to control our decisions. We won’t purchase products just because they sound good.

If you aren’t currently working with a CERTIFIED FINANCIAL PLANNER™ Practitioner you can learn more about my practice HERE or you can find other CFP® Practitioners HERE.

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