4 Ways Retired Wealth Investors Can Protect Their Money

financial planner, financial planning, retirement, investment advisor, wealth advisor, investor, brokerBy Jeff Voudrie
Retired Wealth Investors are frustrated by a combination of lack of growth in their accounts and the global political and economic uncertainty. They remember what the markets were like between 2003 and 2007 when their accounts steadily and consistently increased in value with little effort. They remember being able to sleep at night and their satisfaction that their advisor was doing a good job.

The situation they find themselves in now is very different. Government statistics show that the average household has lost 40% of its wealth since 2008 due to the stock market crash and the collapse in housing prices.  Their comfortable retirement is not so comfortable anymore.  They feel the pressure of finding a way to increase the value of their portfolios but they recognize the perilous times we are in.

There are 4 things that retired wealth investors in this situation can do:

1.  Keep the first things first. Believe it or not, there are things in life that are much more important than money—things that money cannot buy. Things like relationships with a spouse, children and friends; things like health; like time.  Earlier in my career I focused too much on being the provider and I worked all the time. I wasn’t there during the early years of my four oldest children. I’ll never get those years back. Think about the people that matter the most to you and the value they’ve brought to your life. Our lives are limited and we get to choose how we spend our time. Financial matters must be dealt with, but don’t let them steal your mindshare and rob you of those more important things.

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2.  Recognize that the world has fundamentally changed. Today’s retirees grew up in the golden years of the Industrial Age.  They were able to get an education, find a well-paying job with a good company and work at one place for their entire career, retiring with a nice pension and nest egg. The world has changed dramatically in the last 10 years. Our children and grandchildren face a very different reality where jobs are harder to find, the global economy is growing slowly (at best) and their standard of living will probably be below that of their parents. And the stock and bond markets have changed. You experienced the greatest Bull market in the history of the U.S. stock market—one lasting over 20 years without a significant, long-term decline. That market is gone and is unlikely to return anytime soon. It’s been replaced with a Bear market that potentially can last another 5-10 years. That doesn’t mean that the markets keep going straight down. There will be seasons and years when the markets will do well but it will be in the context of a longer-term market that moves sideways or down. The average annual return of your portfolio may be in the low to mid-single digits…in the good years.

3.  Take a more active role in the oversight of your portfolio. Since the type of markets we are likely to experience the next 5-10 years are significantly different from those experienced between 1980 and 2007, your philosophy, strategies and approach to investing also need to change. The buy, hold and prosper many experienced over that time has turned into buy, hold and suffer. If the stock market is going to move sideways or down over the next several years; or if it is going to be highly volatile; or if globally we are going to experience an extended period of slower growth as we work off the massive debt burdens we’ve created then the last strategy you want to use in buy and hold.  Nor should your rely on the typical Wall Street System advisor because they function more as a salesperson than a portfolio or money manager.  That type of advisor may have been sufficient during the Bull market but during times of great uncertainty it is vital that you work more directly with the person actually making the day-to-day decisions. You need to take a more active role in the oversight of your portfolio because, frankly, no one is going to care as much about your money as you do. You need to understand and be involved in the decisions regarding management philosophy and the risk management processes that are in place. Taking a more active role will result in you feeling more in control of the situation and that alone will reduce your stress and frustration.

4.  Be careful and patient. The value of your portfolio and your overall financial condition isn’t going to change overnight. You may never again experience consistent returns of 8-10% a year. Interest rates may remain at historically low levels for several more years.  Economies may only sputter along. Begin taking active steps now to adjust your lifestyle and expectations to this new reality. Help your children and grand-children understand the challenges they will face and prepare them. Beware of investment products like indexed annuities or lifetime income guarantees that appear to offer a return that is significantly higher than the rates offered on things like Certificates of Deposit or high-quality bonds. Invariably, these products and features do not work the way that you think they do, nor are they likely to deliver the return you expect. There’s no magic bullet; there’s no ‘special’ product that is going to solve your problems.

Granted, these actions aren’t going to result in a dramatic improvement in the value of your portfolio overnight. It is important, though, that we recognize that the world we live in has fundamentally changed and that we aren’t going to return to the good ‘ole days. What used to come easy will now require a lot of hard work and effort.  During times like this when the markets can soar or plunge several percent in a matter of hours or days, it is more important to place the greatest emphasis on protection.

There are strategies that are designed to provide retired (or near retirement) wealth investors with the returns they need in a relationship that should allow them to safely navigate difficult waters and arrive at their destination safely. Contact me to find out more.

Common Sense Advisors does not offer investment advice via this medium. Under no circumstance whatsoever do these postings, opinions, charts, or any other information represent a recommendation or personalized investment, tax, or financial planning advice.


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Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of his employer or any other person or entity.