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Readers from all across America
have contacted me because they’re afraid of the impact a
terrorist event could have on their nest egg. They’re losing
sleep because they’re afraid that they’ll wake up one
morning to discover another deadly attack has struck
American soil, sending the markets into a downward spiral
and evaporating their life’s savings. Their concerns are
valid.
The good news is it doesn’t have to be this way! You
shouldn’t be losing sleep over your money. You’ve worked
hard to accumulate your wealth and you shouldn’t have to
white-knuckle your way through retirement.
Wisely choosing the investments in your portfolio, having a
plan of action in place, and working with the right advisor
will help to put your mind at ease. Unfortunately, few
advisors have changed their approach to investing to better
protect their clients.
What would likely happen to various investments if we suffer
another domestic terrorist attack? Initially, trading would
be halted. Once reopened, there’d be a sharp sell-off in
stock-based investments. Losses of 10, 20, or 30% could be
possible. There’d be a flight to quality with traders and
investors selling stocks and buying government bonds.
It could take days, weeks, months, or even years for the
markets to recover depending on the severity and nature of
the attack. Certain sectors would be hit harder than others.
For instance, after 9/11, airline, travel and insurance
company stocks were hit very hard. Attacks could disrupt
normal economic cycles, result in greater unemployment and
drastically increase the cost of living.
How can you reduce your risk? First, work with an advisor
that has a specific plan of action and systems in place to
help protect your money. If an event happens you won’t have
time to thoughtfully consider your actions and you may not
be able to reach your advisor. If your advisor has to
manually adjust your portfolio then it may be too late. I
have a pre-defined action plan for my clients.
Secondly, you must be able to rapidly access and move all
of your money--not just a small portion of it. The
investments you use today will determine your flexibility
tomorrow. Stay away from high-commission products and ones
that carry surrender fees like annuities.
Third, make sure you aren’t too heavily weighted in
investments that can’t be quickly sold. For instance,
traditional mutual funds can only be sold at the end of the
trading day. That’s why I keep about half of my clients’
money in Exchange Traded Funds (ETFs). ETFs mimic the major
indexes such as the S&P 500 but can be sold throughout the
day at a moment’s notice like individual stocks. This means
we can quickly move their money to safety at a moment’s
notice.
Lastly, work with an advisor who actively manages your
portfolio. If you’re retired or near-retirement your
priority should be keeping what you’ve worked so hard to
acquire and there are times that you will sleep better NOT
being exposed to the market. Make sure you are using an
advisor that understands that.
Some of my clients currently have as much as 80% of their
portfolios in cash or investments that don’t fluctuate in
value. As current risks subside we can easily increase their
market exposure. They may miss a little growth in the
meantime, but their comfort and peace of mind is more
important. And so is yours.
If you’re not comfortable with your current portfolio and
your advisor isn’t listening to your concerns, fire them and
find a new one! Stay away from advisors that push packaged
products like annuities or load mutual funds.
Find an advisor who will listen to you and actively manage
your money. There are advisors who will closely watch your
portfolio and be ready to respond should catastrophic events
rattle the markets. They’ll listen to your concerns and
invest your nest egg accordingly without subjecting you to
massive commissions or onerous surrender fees to do it.
So put away the Rolaids and finally get a good night’s rest.
By staying flexible and finding an advisor you’re
comfortable with, you can stop letting the threat of
terrorism steal your peace of mind.
If you’d like free, clear, unbiased advice submit your
question at www.guardingyourwealth.com/askjeff.htm.
Mr. Voudrie is a Certified Financial Planner, nationally
syndicated newspaper columnist and President of Legacy
Planning Group, Inc., a Private Wealth Management Firm in
Johnson City, TN. He can be reached toll-free at
1-877-827-1463 or at
jeff@guardingyourwealth.com.
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