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The Debt Ceiling and Risk Tolerance

Wednesday, November 2, 2011 @ 01:11 PM
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With the impending Debt Ceiling culmination seemingly right around the corner, people are getting more and more worried about the impact this will have on their investment portfolios.
From my many recent discussions on the subject, folks are looking to run away from their stock holdings in order to prevent potential losses. This continues to reinforce our belief that at least 75% of investors are allocated too aggressively for their own risk tolerance.
The best question for somebody who is invested in variable investments to ask him/herself is’Am I OK with my investments declining 20% in a given year?’. If the answer is a clear ‘NO’, then he/she should seriously consider something with some downside protection – a managed account w. a strong emphasis on minimizing risk, or a fixed or indexed annuity product.
We’re seeing a lot of flow towards the indexed annuity marketplace, as clients become more educated on the features and benefits of these types of products. More people (esp. those age 50+) are looking for guarantees of principal protection with higher growth potential than current fixed interest rates can offer. As long as someone can handle limited liquidity of these assets (typically 10% per year) then this type of product could be a good fit for those who can’t or don’t want to handle 20% losses.
Please feel free to contact us directly at info@jrlfinancialgroup.com or 919-576-0609 if you have any questions.

 

 

Advisory Services Offered Through Spark Asset Management Group, Inc. a NC registered RIA.  There is no relationship between Spark Asset Management Group, Inc. and JRL Financial Group, Inc.  Spark Asset Management Group does not offer tax or legal advice.

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