There’s a proverbial phrase that most of us have heard that says, “What goes up, must come down.” Investors that had money in the stock market during the downturn in 2001 and 2008 not only know that phrase, they suffered it firsthand.
They experienced the market increase repeatedly. Then twice it reversed and adjusted. I get it. It’s tempting to watch the market doing well and not want to be a part of it. For some people that may actually make sense to have a portion of your portfolio in the market.
But what if I told you there was a way to protect your money from market downturns? A way to protect your money from volatility?
Here’s some questions to consider when deciding whether to protect a portion of your money.
Does it make sense to put all of your money in the market? For some of your money, it may be worth considering. Although it may not be the best decision for every dollar to be truly diversified.
Another question you could ask yourself is, do you feel that putting your money into different mutual funds and bonds truly diversifies you?
One thing it probably does not completely diversity you from is safeguarding a portion of your money from market volatility.
You see, volatility exists today at a potential higher level than past years. Many experts are warning of a huge correction coming. Less than a week ago Goldman Sachs says conditions point to the stock market seeing a correction of 10 to 20 percent in the next few months. Knowing that, it might be a good time to take a second look at capitalizing on the gains you’ve already seen.
For many, it might make sense to diversify your portfolios across different asset classes, yet also diversify from market risk and even taxes.
Ask yourself it that makes sense for you.
Often, when I look at people’s individual situations, I find many that could benefit from this type of diversification.
Again, that is another reason that it might make sense to do an analysis of your existing situation to see if you can shelter yourself and your estate from volatility and excessive taxation. Volatility is one thing that could cause issues to your money if you don’t diversify properly. Another element that could also cause some problems is taxes. Not only the taxes you pay today but also the taxes you might pay in the future.
If the forecast is accurate and the market has a significant correction, how will that affect you? Fifty-nine percent of employed investors said a “significant” market drop would force them to delay their retirement, while 25 percent of those already retired said it would disrupt the plans they have in place.
For some, they don’t know what to do if they pulled their money from the market. We live in a world where we are constantly bombarded with information. Sorting through all the different advice and recommendations can be a daunting task — a task you shouldn’t have to do alone.
If you would like a personalized analysis for your individual situation, call my office to request one today.
Holly Peterson is the owner of Elite Life Services and former radio show host. She is a professionally licensed insurance producer specializing in retirement planning and safe money solutions. Holly serves all of Idaho. You can find her online at elitelifeservices.org or by calling 208-252-4345