Furious about the stock market?

A lot of people I speak to are furious and disappointed that their retirement portfolio invested in stocks is down 20% this year. Especially people older than 50.

If you are one of these people, you are probably scared that more bad years will you’re your retirement. And you should be scared! It is hard to make up these losses, especially over a few years.

How are you going to gain back these losses, and prevent further losses?

You really have four choices at this point, and each of these has good and bad points:

1—Get rid of the stocks, and buy something else—real estate, gold, antiques, collectibles, crypto, etc. Buying these other assets is probably not a good idea, because there is a high level of risk. Some of these investments are good in the long term, but we no longer have a lot of time, so if you go in this direction, be cautious, and limit the amount you invest. And realize that these investments are illiquid.

2—Convert everything to cash, and put it in a money market account or certificate of deposit. This is very safe, and you can probably earn 3% to 5% a year now. But with inflation the way it is, this choice is really just remaining even, and not gaining anything. It just preserves what you have.

3—Put the cash into an annuity that offers all (not just some) of the following features:
• The value will grow according what index it is linked it to — (it takes a while to explain this in detail, but we are looking at more than a CD or money market account).
• If the market continues to be a disaster for each of the next ten years, at the end of ten years, you will get a minimum of 18.5% more than you put in, guaranteed.
• If the market goes up in any of the next ten years, you will participate in that gain. Importantly, once this happens, this gain can never be taken away, even if the market goes down again.
• In any of the next ten years, you can take out 10% of what they put in, if you need emergency cash, without affecting future growth.
• At the end of 10 years, you decide if they want to take income for life, cash out and do whatever you want with the money, or roll it over into another annuity and keep it growing.

4–Or just keep it in the stock market as it is now, and pray that it does not go down more.

Here’s my recommendation:

1—You probably do want to keep some money in stocks, as long as you watch the account. If and when the market rebounds, this is one of two ways to participate in that rebound. But your investments should be in strong stocks, and not the risky stocks that everyone is talking about.

2—You probably do not want everything in cash, but you may want to put a small percentage of what you have in a liquid account paying 3% or more, to keep funds on the side for opportunities that will come up over the next few years.

3—I might recommend, depending on other factors, an annuity that meets the criteria listed above in choice #3. There really is no downside risk. You will not have access to the bulk of the money you invest for the first five years or so, which means that this has to be money than you are able to let grow. The upside is that you are participating in some of the future market gain with no risk of loss, which is important. I am helping a lot of clients do this.

4—This is too risky, and really tossing things to the wind. Yes, you may want to keep some stocks, as I mention in option #1, but it makes more sense to participate in a potential rebound by following option #3.

Please let me know how I can help.