Everyone Wants A Guarantee!!

This has been what I call an old fashioned winter. Lots of snow and very cold. In this case the good old days are not that good. It’s the middle of February and it seems winter has been here for ‘years’. One of the story lines for the winter that never stops is the propane gas shortage. There remains homeowners that are begging for ‘more’ gas. The reasons of the shortage have been many and the finger pointing will continue. Is it the fact that the Canadian pipeline was shut down in September for maintenance? Or was it because of the huge corn crop which uses propane gas to dry the corn?  Are the truck drivers to blame? Maybe it’s simply the fact that it has been an extremely COLD winter across the country. It’s probably a combination of all and perhaps even more ‘reasons’.

propane tank
propane tank (Photo credit: jonkeegan)

Many homeowners and business owners have guaranteed contracts with their gas company.  Some even went so far as to pre pay for their propane. Under normal circumstances these ‘guarantees’ worked great. The gas company either delivered gas on a predetermined schedule or waited for the customer to call when they needed propane.

But not this time. When the shortage began to affect delivery and the gas levels became low the customers called because they did not receive their much needed propane. The conversation went something like this: “I did not get my scheduled propane delivery”…”We don’t have enough propane to deliver”…””But I have a contract/prepaid”…..”But I don’t have any gas”….”But I’m running out of gas and my house is freezing”….But I don’t have any gas”…”If I don’t get propane soon I will have to close my house/business”…But I don’t have any propane”..

What does this have to do with investing? Well if you are investing your money with guaranteed products such as annuities or CDs. And what you are protecting yourself from actually happens. Will the insurance companies / bank be able to honor your ‘guarantee’?

No matter where you invest there will always be risks. Inflation risk…credit risk…equity risk. Risk is unavoidable.

The reason we earn a premium return with equities is we must experience ‘bad’ markets. We get the good along with the bad.

Your best solution long term is to follow three simple rules:

  • Own equities and fixed income.
  • Globally diversify
  • Rebalance

Although simple following them requires the help of an investor coach because we are all emotional beings…..Thankfully!!

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