My Portfolio Sank. Now what?Penelope TzougrosThe Capital – Medium

By Penelope Tzougros on The Capital

The markets have declined and so have many portfolios.

A client called me and asked which of three options she should take: 1) stay put; 2) sell everything; 3) commit suicide. Fortunately, she meant the third option to be humorous.

Here are the guidelines I suggest.

1) If your account statement shows a loss, it is a paper loss until you sell. When you sell, you lock in that loss, that lower dollar value. Keep in mind the difference between a paper loss and an actual loss.

2) If you bought an investment because it was good quality, give it time to recover. The comparison I make is if a healthy person gets the virus (not COVID-19), then rests, gets proper nourishment, etc., that person is likely to be fine in a week or two. A good investment is like that though the recovery time may be different. So, just be patient.

3) If you are not confident that your investment will recover, or you think it will lose more value, then consider an investment that will guarantee growth. There aren’t a lot of guarantees in the investment world, but annuities do offer guarantees based on the claims paying ability of the issuing company. Would it be acceptable to you if your portfolio grew at a guaranteed 5%, 6%, or 7%? If you answer, yes, then learn about annuities and understand their benefits and limitations.

They are long term investments with fees and restrictions. I’ve written, Annuities-Retirement Promises or Traps to introduce you to this type of investment. You can download it here.

You might ask, “Wouldn’t I do better just to wait for the market to bring up the value of my portfolio?” Maybe. But, consider this if you are nervous about it sinking more, or how fast it will grow back, you could take just a portion of your portfolio and invest it at a guaranteed rate, that portion would be guaranteed to grow at a specific rate for a specific time.

This action might make you feel better and also help your money grow.

There are many types of annuities but what I have found as a financial planner for over several decades is that those in their 60’s and 70’s might find two types of annuities attractive for their purposes.1 One is a Single Premium Immediate Annuity (SPIA) and the other is a Variable Annuity with a Living Benefit. Those are explained more fully in the Annuities article.

Any investment should be the right fit for your goals and your mindset.

4) Explore and learn about investments. Look at the history of the stock market. Notice the downturns and the recoveries. When you see those patterns, you have a context for understanding what is happening now.

Purposeful and thoughtful investing lessens stress and can help you be a successful investor.

___________________________________________________________

Penelope S. Tzougros, Ph.D., ChFC, CLU. Financial Planner, Author, National Speaker. Wealthy Choices.com. Penelope@wealthychoices.com. In all 50 states, Penelope S. Tzougros is registered with, and securities and advisory services are offered through, LPL Financial, a registered investment advisor. Member FINRA/SIPC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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My Portfolio Sank. Now what? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

By Penelope Tzougros on The CapitalThe markets have declined and so have many portfolios.A client called me and asked which of three options she should take: 1) stay put; 2) sell everything; 3) commit suicide. Fortunately, she meant the third option to be humorous.Here are the guidelines I suggest.1) If your account statement shows a loss, it is a paper loss until you sell. When you sell, you lock in that loss, that lower dollar value. Keep in mind the difference between a paper loss and an actual loss.2) If you bought an investment because it was good quality, give it time to recover. The comparison I make is if a healthy person gets the virus (not COVID-19), then rests, gets proper nourishment, etc., that person is likely to be fine in a week or two. A good investment is like that though the recovery time may be different. So, just be patient.3) If you are not confident that your investment will recover, or you think it will lose more value, then consider an investment that will guarantee growth. There aren’t a lot of guarantees in the investment world, but annuities do offer guarantees based on the claims paying ability of the issuing company. Would it be acceptable to you if your portfolio grew at a guaranteed 5%, 6%, or 7%? If you answer, yes, then learn about annuities and understand their benefits and limitations.They are long term investments with fees and restrictions. I’ve written, Annuities-Retirement Promises or Traps to introduce you to this type of investment. You can download it here.You might ask, “Wouldn’t I do better just to wait for the market to bring up the value of my portfolio?” Maybe. But, consider this if you are nervous about it sinking more, or how fast it will grow back, you could take just a portion of your portfolio and invest it at a guaranteed rate, that portion would be guaranteed to grow at a specific rate for a specific time.This action might make you feel better and also help your money grow.There are many types of annuities but what I have found as a financial planner for over several decades is that those in their 60’s and 70’s might find two types of annuities attractive for their purposes.1 One is a Single Premium Immediate Annuity (SPIA) and the other is a Variable Annuity with a Living Benefit. Those are explained more fully in the Annuities article.Any investment should be the right fit for your goals and your mindset.4) Explore and learn about investments. Look at the history of the stock market. Notice the downturns and the recoveries. When you see those patterns, you have a context for understanding what is happening now.Purposeful and thoughtful investing lessens stress and can help you be a successful investor.___________________________________________________________Penelope S. Tzougros, Ph.D., ChFC, CLU. Financial Planner, Author, National Speaker. Wealthy Choices.com. Penelope@wealthychoices.com. In all 50 states, Penelope S. Tzougros is registered with, and securities and advisory services are offered through, LPL Financial, a registered investment advisor. Member FINRA/SIPC.The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.https://twitter.com/thecapital_iohttps://medium.com/media/3b6b127891c5c8711ad105e61d6cc81f/hrefMy Portfolio Sank. Now what? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.Read Morefinancial-planning, portfolio, stock-market, finance, investingThe Capital – Medium

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