Month: May 2022

You may be retired and considering investing some of your retirement nest egg. Depending on your situation, it is crucial that investing in the stock market, bond market, or other investments does not jeopardize your retirement savings. For this reason, investments that preserve your initial contribution but still provide growth opportunity is essential. Here, we will start with the basics for beginners interested in investing after retirement:

Review your financial plan- again.

Investors often think that financial planning is for the accumulation phase, but financial planning is also for the spending down phase. With the pandemic and recent market volatility, meet with your financial professional to work towards aligning your retirement portfolio allocations with your investment strategy. Also, consider if investing will negatively impact your retirement income or not.

Account for Risk

Investing in a down market can allow for the purchase of more shares. However, retirees need to be aware of the investment’s risk score since they will hold the investment for a shorter duration due to withdrawing each month. Their investment may need to liquidate during a period of low valuation, causing a loss on their initial investment. For this reason, a retiree’s investments should correlate with a lower risk score.

Watch inflation

Inflation can cause a portfolio to liquate faster than expected due to inflation risk. But positioning it by increasing positions such as gas and energy and consumer staples may produce a higher return than the inflation rate. However, once inflation is on the decline, it is time to reposition to investments that are not interest-rate sensitive.

Consider guaranteed income investments.

Often retirees view bonds as ‘safe investments,’ but that is not necessarily true today as bond rates are below the inflation rate, resulting in negative performance.

Another investment to consider is a Fixed-indexed annuity. Fixed-indexed annuities produce returns based on an index, such as the S&P 500, and your initial investment is protected. Fixed-indexed annuities are a contract with an insurance company that provides you with guaranteed income in retirement.

Explore Real Estate Investment Trusts (REITs)

REITs invest in commercial properties or mortgages and, by regulation, must distribute 90% of their taxable income in the form of dividends to investors. REITs develop and improve their properties to produce returns, eventually sell them, and reinvest in other properties, making a positive return for investors.

Work with a financial professional

If you are retired and considering investing, now is a great time to meet with a financial professional to determine a strategy aligned with your goals and investment horizon.

 

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Inflation risk is the risk that unexpected changes in consumer prices will penalize an investor’s real return from holding an investment. Because investments from gold to bonds and stock are priced to include expected inflation rates, it is the unexpected changes that produce this risk. Fixed income securities, such as bonds and preferred stock, subject investors to the greatest amount of purchasing power risk since their payments are set at the time of issue and remain unchanged regardless of the inflation rate.

Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Fixed Indexed Annuities (FIA) are not suitable for all investors. FIAs permit investors to participate in only a stated percentage of an increase in an index (participation rate) and may impose a maximum annual account value percentage increase. FIAs typically do not allow for participation in dividends accumulated on the securities represented by the index. Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Withdrawals prior to 59 ½ may result in an IRS penalty, and surrender charges may apply. Guarantees are based on the claims-paying ability of the issuing insurance company.

S&P 500 Index: The Standard & Poor’s (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

LPL Tracking # 1-05259889

As a small-business owner, you may be looking for the next big thing—an investment that might double your profits within the next year or allow you to maintain your income while working just a few hours a week. However, business success may depend on many incremental investments you make along the way.

By including investments that fall outside the financial realm, you may better position your business and yourself to take advantage of future opportunities. Here are four key investments that may help your business thrive.

Invest in Your Health

Starting a company is all-consuming. You may find yourself relying on too many fast-food meals and getting too little exercise as you put in the long hours needed to get your business going. Nevertheless, business success may be anticlimactic if you are not healthy enough to enjoy it.

Invest in yourself by taking time for self-care, exercise, time with family, and healthy meals. Realize that your business may only be as healthy as you are.

Invest in Your Education

Education is more accessible than ever, including pay-per-credit-hour classes at local community colleges and online courses from some of the country’s most reputable universities. Small-business owners may take advantage of these educational opportunities to expand their knowledge on any number of subjects.

Perhaps you want a greater understanding of grants or loan opportunities that may be available. You might desire to learn about a new marketing strategy. Investing in your education may give you a knowledge base to support you throughout your entrepreneurial efforts.

Invest in Financial Professionals

If you try to run your business while also doing your taxes and keeping your books, you may find that there are not enough hours in the day to do everything. It is challenging to stay abreast of legal, tax, and regulatory changes that impact your business. Under such circumstances, financial professionals can be beneficial.

Having a financial professional handle your taxes and help you work towards making your business more tax-efficient may positively affect net income even with the existing revenues from sales. For example, you might change the way your company operates or the state in which your business is located to improve the tax efficiency for your business.

Invest in Your Business

When your business starts, it may be tempting to run it as lean as possible to boost profits and increase your attractiveness to lenders. But at some point, running your business too sparingly may create a problem. You might not capture the opportunities to make your business more efficient.

Whether upgrading equipment or purchasing new software, investing in your business may yield a higher return on investment if it frees up valuable employee time to help expand your customer base. Be sure to consider investments in technology and assets that might help your business perform better.

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

This article was prepared by WriterAccess.

LPL Tracking #1-05255895

 

When you invest in the stock market, you want to see growth, but unfortunately, in most cases, investments do not grow all the time. Inevitably, the market goes up and down, and to safeguard your potential for long-term growth, you need to understand the importance of staying the course through market volatility. However, you also need to adjust your approach to investing at different ages.

Staying the course through market volatility has different implications at ages 20, 30, 40, 50, and into retirement. Check out these tips.

20s to 30s

At these ages, you should be actively saving for retirement. By investing early, you have the opportunity to amass more wealth than you do if you wait until you are older. When choosing your investments, keep your personal risk tolerance in mind, but don’t necessarily sell funds that drop in value. At these ages, you don’t need the funds for another 30 to 40 years, and as a result, you have the ability to ride through market volatility. Typically, at these ages, the best course of action when investments drop is to just do nothing.

40s to 50s

At these ages, retirement is looming on the horizon, and ideally, you should be investing as much as you can. Even at these ages if your investments drop in value, you shouldn’t necessarily sell. But you should consult with a financial professional and make slight changes as needed.

Keep in mind that while the market grows at an average of 7.2% per year, research indicates that the average investor only sees 5.3% growth per year — analysts speculate that this discrepancy may be due to investors selling or cashing out when the market drops.

60s to 70s

At this point, you should reach out to your portfolio advisor and make sure that you are ready to make the leap to retirement. As a general course of action, your investments need to be lower risk during these decades of your life, and your cash reserves should be higher. As a general rule of thumb, you should have at least two years of cash reserves in place. This gives you the flexibility to ride out drops in the market. Typically, when the market drops, it takes about two years to correct.

Retirement 

Now you need an investment strategy that helps you maintain your retirement funds. To deal with market volatility and to outlast downturns in the market, you should have five to 10 years of cash reserves or liquid investments in place. Depending on your financial objectives, you may want to replace high-risk investments with stable and predictable investments such as CDs.

Best Practices for All Ages

Regardless of your age, you should keep these tips in mind during times of market volatility:

• Strengthen your portfolio with high-dividend and value stocks
• When investing during a bear market, don’t rush. Ideally, you want to wait until the market bottoms out.
• Increase your cash position to help you weather volatility.
• Actively monitor financials.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

LPL Tracking # 1-949921

 

Source

20% every 3.5 years and 7.2% growth vs 5.3%:https://www.capitalgroup.com/individual/planning/market-fluctuations/staying-the-course.html