Taking Control of Your Finances
By Laura Reeves
With all the uncertainty in the world right now, politically, socially, and economically, I would like to offer some ways that we can take control of our financial households. Simply said, lack of control causes emotional and physical duress. We all have the power to make changes to enhance our lives and over all well-being. Cheers to bettering our lives!
I thought I’d start by sharing some measures that I take, within your Advisory portfolios to insulate and alleviate the overall bumpy road we are now on. There are many protective vehicles to choose from. One in particular, is called a structured note. Simply stated, a structured note is a debt security that is issued by various financial institutions. The return is based on several factors; a basket of equities, interest rates, or commodities, all of which are dependent on what you choose and how well it performed within the specified time frame.
The biggest advantage of a structured note is that it offers downside protection usually from 10%-30%. As an example, if we secure a 20% note from JP Morgan and the market goes down 22%, JP Morgan would assume 20% of the loss while the investor would assume a 2% loss. As you can see, it is a powerful tool, specifically during downside markets. While securing downside protection, the investor is also providing him/herself upside potential by investing a chosen index up to a specific cap. It is truly the best of both worlds, protection on the downside while remaining in the market
Consideration should be given, as they are complex products, some of which with limited liquidity and are meant to be held to maturity. A typical time frame would be 2-5 years.
To conclude, I find the best form of control is proactive planning. We achieve this by not making decisions in haste such as selling in a down market (which, though counterintuitive is tempting for some without proper guidance) and making thoughtful decisions that will mitigate risk while staying on track in bolstering your retirement nest eggs.
"The Goal Isn't More Money. The Goal is Living Life on your Terms"
Will Rogers