I love Shania Twain! One of my favorite Shania songs is “Don’t Be Stupid!”
The title of that song has application to the stock market that is slapping us in the face at the time of this writing.
Stock prices are dropping like trash tossed from a third story window and investor hearts are melting like ice cubes on asphalt in Phoenix in August. Panic over the Coronavirus, COV-19 is spreading irrationally and folks with money in the market who “cannot afford to lose everything” are mindlessly selling.
Selling good stocks at this time is probably the worst thing you could possibly do.
Don’t let that be you. My mentor, Ted, one of the best investors I ever met, when asked repeatedly in the midst of a market drop, “how much money did you lose?” replied, “nothing. Unless I sell, I have not lost a dime, and I do not intend to sell.
Why was he so confident, even in his retirement? He had an “all weather” investment strategy that could work – as he used to say – come hell or high water – in up markets and down.
I learned from him how to build an investment portfolio, like your financial house on a firm foundation. If you know the proverb, you know the story of two homeowners; one who built on sand and the other who built on a rock. Both endured storms; unavoidable in life, but only the one who built on the rock saw his house still standing when the storm subsided.
So, what am I saying? Two things to consider with your investments:
- If you want growth, over time, without having to endure periodic drops in stock market prices, and get some lifetime income guarantees, a fixed indexed interest annuity could be right for you. But, please, don’t just buy any annuity from any company. There are pitfalls, gotchas, in the fine print. Know what they are; be assured that the positives outweigh the negatives before you give the agent your money.
- Annuities are not appropriate for everyone or every situation, however. If you need growth and income, you can get it in the stock market, too, but, as with the annuity, working with a knowledgeable, caring advisor can help you make more appropriate investment choices.
- You can focus on growth-oriented investments. You can speculate but you will need to be emotionally toughened to endure periods of harsh losses that may wipe out years of gain in an instant.
- Or you can create and employ an investment strategy that focuses on creating streams of predictable income.
- When the market is up, we will usually see growth. But, when stock prices are down, income can increase. If you are saving for retirement or financial independence, increasing income, regularly reinvested to buy more shares can work harder for you when market prices are down. Why? Because reinvested income can buy more shares when share prices are lower. Call it “dollar cost averaging” with income from your investment.
Investments that Make Sense
Seeing something positive happening in your portfolio when others are retreating in fear can give you reasons to stay the course.
Our oldest-living client, who died just prior to her 103rd birthday, lived on Social Security and the dividends from her investments. During the last 24 years of her life, she gave away nearly $700,000 to her church, charities and children. When she died, the money her remaining money was roughly equivalent to what she and her husband had when he died 24 years before. Knowing she could count on her income gave her freedom to live and give generously in good times and bad.
How does this work? Is it right for you? Call Mary at 623-537-3657 or 800-4-TEWALT to schedule a no-cost, no obligation consultation. We will answer your questions and address your concerns.
This is a good time to examine your investments and make certain you have a plan that can meet your needs, give you assurance in the midst of the storm. This is the time to make sure your financial house is built on a rock; a firm foundation that may enable you to weather the storm.
Call 623-537-3657 or 800-4-TEWALT today.