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Be Aware of Bad Advice in a Risky Stock Market

I think that investors are getting the message. There is a good chance that the market is in trouble. As a result, investors and retirement accounts might be in trouble. Is this going to be one of those periods where investors loose up to -50%? Well to Pop Culture Finance (mainstream financial media) the advice is always the same and not in the best interest of investors. So, here is a sampling of what you are probably going to be hearing.


Don't look at your statements

Just because you ignore it doesn't mean those losses are going to go away. Understand the risk you are taking with your investments. Be comfortable with it. Most importantly, have an advisor who actually manages money come up with a Plan B for you. What you don't know won't hurt you mentality is dangerous for your retirement goals.  


Switch to an Annuity

Annuities are guaranteed. They protect against market loss. They are good investments only when the investor is very (extremely) conservative. Many advisors recommend them to combat fear of a falling market. Instead, combat the fear of a falling market by having a Plan B. That way, you don't lose your ability to retain your risk level when the market recovers.  Changing to an annuity as a Plan B is bad advice when the investors' risk level is really not a match with the very conservative risk nature of an annuity. You only want to switch to an annuity when your risk level is extremely conservative and your investments are currently in the wrong risk level.  


It is just volatility - don't worry about it 

What the heck is volatility anyway? I wrote this article on it last week. Volatility is the wrong word to describe a falling market. Volatility implies that the market is going through a temporary decline. As we know, the market can fall for a long time and be much more than volatility. Volatility is the sign that there is something wrong with the market. A prolonged market decline is much more than volatility and requires a Plan B. It definitely shouldn't be ignored.


Bottom Line:

Investors feel helpless in these types of markets as we are experiencing today.  Just know, there are options.  If you want to discuss your options, please reach out and let's have a conversation.  


Bob Brooks

972-386-0384

bob@prudentmoney.com

Ask Bob