I get asked that question a lot when I am talking with clients. Let’s face it, the Stock Market is a bubble getting ready to burst. People lost large portions of their retirement portfolios in 2008. That was not that long ago and the pain is still very real for most Americans.
When I ask someone if they have taken any hits in the stock market, it is usually responded to with a nervous laugh, then they say, “Hasn’t everyone?” I just tell them, “No, not everyone.” There are safe places to put your money these days depending on what amount of money you have and how long you are willing to have your money tied up. I am not one to cry, “The sky is falling!” But…I am concerned about the rampant spending of our government and the position of the stock market (which is artificially inflated).
I don’t have a securities license, and frankly, I don’t want one. No offense to those of you that have one…I just want to be able to sleep at night and not worry about what the market is doing. I don’t want to be getting calls from angry investors because they lost money on something that I recommended to them.
There are 4 strategies that I personally use that have been successful in safeguarding my client’s retirement:
- Life Insurance. There are several very cool IUL products that get great returns and are very safe. If funded properly, they can provide additional income in the retirement years. If it is a single premium, even better. The face is dramatically increased and the backside returns are accelerated.
- Annuities. I like these for a variety of reasons. They are safe. They are semi-liquid in that you can take out 10% a year without penalty. They often come with a bonus above and beyond the standard returns. And they can be indexed to take advantage of the market upswings without the downside risk.
- Gold. Always a safe place to have some of your money.
- Sr. Life Settlements. This is by far my favorite asset class to expose my clients to. Most people do not understand what they are, and many are just ill-informed as to what they do and why they are truly one of the best investments on the planet. I realize that there is a lot of negative press about these, but you have to put that in perspective. The internet is like a graffiti board. People can write whatever they want and not be held accountable. I like Sr. Life Settlements because the returns are outstanding, there is no exposure to the market, they are not affected by who is in the White House, not by what is happening overseas, not by what the recent reports from Wall Street are touting…none of that affects their performance. People like Warren Buffet hold large amounts of Sr. Life Settlements, along with institutions like J.P. Morgan Chase and Bank of America.
I don’t do real estate, but I do believe that real estate is a solid investment for at least part of someone’s portfolio. The only problem is that real estate can take quite a tumble too. Just ask investors in California, Florida, and New York…just to name a few that have had severe adjustments.
I tell potential investors that now is not the time to be in the stock market. If you are 30, you might have enough years to recoup your losses when the market comes down…and it WILL have a severe adjustment, but the question is, why would you want to risk anything if you can put your money into something that is safe that gives you above average returns?
I know some people like to gamble. I just am not one of them. I don’t want to gamble with my money…and I treat my investors’ money like it was my own.
So, what do you recommend to nervous investors these days?