April 2, 2018 | Categories: Annuities Financial Planning Results in Advance Planning Retirement Goals Safer Growth Smart Money Stock Market

What is your plan with the stock market?

Earlier this year, the stock market was around an all-time high.  What is your plan moving forward so you can continue to see your account values increase when the market goes up, while having some levels of protection if the market goes down?

It can be very important to have a plan in place so you can continue to experience growth in your portfolio, but without having everything at a potential risk of loss.  I have seen the mistakes that some people made back in 2001 during the tech bubble or in 2008 during the housing crisis.

Imagine having a plan in place in which you could have the potential for growth with some levels of protection.  One of the keys is planning in advance, before the next major downturn occurs.

 

Many investors have found it beneficial to have different “buckets” of money. 

Bucket #1 could be money in your savings.  This might be 5-10% of your portfolio which could cover 3-12 months of expenses in an emergency.  The money is very liquid and readily available for emergencies while gaining little growth.

Bucket #2 could be money in place that is not subject to market losses such as annuities.  Some annuities can be set up for lifetime income, others for potential growth, and others for a rate of return.  The point is there is a way to potentially grow some of your money with more potential that you would have in savings, and without the risk of the markets. This might be were you have 25-60% of your money depending on your goals and risk tolerance.

Bucket #3 could be money that you have invested in the stock market.  You understand there can be good upside potential, and also the risk of loss. The market has been growing at a good rate since 2010. With this in mind, some investors use the “Rule of 100” to help determine what percentage of their money that they want at risk in the market.  From 100, subtract your age.  Example: 100 minus 65 (if this is your age) would equal 35.  This might be the percentage you want at risk in the market (35%).  Some investors want more, and some less.

 

 

By having your money in different “buckets” and each with a different goal, you can be in a better potential position when the next major stock market event happens.

 

 

Mike Riedmiller, President
Riedmiller Wealth Management

 

April 2, 2018 | Categories: Annuities Financial Planning Results in Advance Planning Retirement Goals Safer Growth Smart Money Stock Market

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