What Are Guarantees Good For?

Since the 2008 crisis the economy is slowly improving. During this recovery many have avoided risk. At least they believe they are avoiding risk. Many are avoiding investing in equities because they believe there is risk of loss. So they are investing is ‘guaranteed’ products to protect their principal. These investors are unaware of the risk they assume with these ‘guaranteed’ products.

That risk is inflation risk or the risk of loss of purchasing power.

Map of Wall Street and the surrounding streets...
Map of Wall Street and the surrounding streets Trinity Church Bank of New York Building NY Stock Exchange Federal Hall Trump Building Cocoa Exchange (1 Wall Street Court) (Photo credit: Wikipedia)

In retirement products the baby boomers are seeking a ‘guaranteed’ income for life. What they do not realize is that what is a sufficient income right now may be not nearly enough to live on in ten or fifteen or 20 or more years. Just think of a quote Warren Buffet made at one of his share holder meetings. He stated ‘to buy $1 of goods in 1965 the year I started Berkshire Hathaway it takes $7 to buy the same goods today’.

If you were in a ‘guaranteed’ investment you would not have kept up.

One of the best ways to keep up with inflation is to own equities. Equities remain the greatest wealth creating tool on the planet. However you need help in properly building a prudent portfolio and the discipline to stay the course. In other words the Wall Street bullies would prefer that you stay glued to the business TV shows and watch all the financial media and trade based on that information.

Yes, being in equities can at times be uncomfortable sometimes very uncomfortable. But with the right knowledge and coaching you will realize that your long term financial goals are within reach. To successfully reach your goals you must be accountable. Actually being accountable is part of being an adult.

When you believe that the Free Markets Work, in that the markets are efficient you will stop gambling and speculating with your money by NOT doing the following:

  • Stock picking
  • Market timing
  • Track record investing

And you will become more comfortable with your investment decisions.

Stop being a victim of the Wall Street bullies.

These bullies are more than happy to provide you with guarantees. Because any investment product which includes a guarantee, someone ELSE is making a good portion of the money.

That someone ELSE is the Wall Street bullies and NOT you.

Many investors are afraid of loss and many times make investment decisions that actually increase their loss of purchasing power.

With the help of an investor coach you can reach your goals by following three simple rules:

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

Believe it or not your investor coaches’ most important value is helping you stay in control of your emotions. Remember the Wall Street bullies will continue to test you.

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