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Member You - Investing - Seniors - Beware of Buy and Hold Investing
Unless you've had your head in the sand you realize that we are living in a changing world, a changing universe, a changing marketplace. Change is everywhere.You can't avoid change. You can't ignore change. You can't prevent change. You just have to live with it!And if you fight change you'll ultimately end up the loser.So how do you deal with change? And if you're a leader, perhaps the more important question is, "How do you help your people deal with change?"The truth is…"People r
To keep from repeating Barry’s mistake, you need to determine the maximum amount you are comfortable losing. For instance, if you are investing $100,000 perhaps you set a ‘floor’ at $90,000. If your portfolio declines in value to the floor amount, you take action. That way you know you only have 10% of your portfolio at risk
The second point is to make sure this ‘floor’ rises as the value of your portfolio rises. If your portfolio goes up 15%, you’ll want your floor to increase 15%, too. This will help you lock in your gains along the way.
If the value of your portfolio approaches your ‘floor’, determine why. Then sell the investments that are the cause of the drop and reallocate that money som
In parts one and two we overviewed fishing for leads, then went into detail on baiting, presenting and setting your hook on new leads for your business.Of course, the purpose of your lead generation is to sell a product, service, or opportunity. That's your number one priority - to make contacts and turn them into customers.You've gotta land that fish.Now that you have set the hook with subscription confirmation and delivered the bait you promised on your lead capture page ...How do you ge
For years we’ve been told that the only safe way to invest in the stock market is to ‘Buy’ quality stocks or mutual funds and ‘Hold’ them for the long-term. This strategy may work well for someone in their twenties or thirties, but it has the potential to severely impact those in or near retirement who depend on their nest egg for income.
Barry retired at age 55 with a healthy $750,000 nest egg. That would have been more than enough to provide for him and his wife, allow them to travel and to live their retirement dreams for the rest of their lives. Unfortunately, Barry made the mistake of following the advice of his previous broker who touted the Buy and Hold strategy of investing (B&H).
You see, B&H says that there isn’t any way to ‘time the market’. It also says that if you are not invested for even a handful of days over a 10 year period, that it can significantly reduce your return. Therefore, it’s reasoned, you should stay invested and just ‘weather’ the difficult periods when the market declines in value. “It will come back, just hang in there,” its proponents argue.
This defies common sense. It’s like telling one of my daughters to wear her bathing suit all winter and to stay outside by the swimming pool, because the hot weather will come back next year!
Barry found this out the hard way. After 3 years of staying out in the cold his $750,000 retirement savings were only worth $350,000. His and his wife’s dreams of traveling and enjoying a comfortable retirement were gone. He has been forced to go back to work, hoping to retire again in 4 years.
The reason that B&H doesn’t work well for seniors is because it assumes you have the time to recover from a severe market downturn. But few realize the implications of this belief.
For instance, if you invested $100,000 in the S&P 500 index on January 3, 2000 it would only be worth $62,626 on December 31, 2002, three years later. That’s a loss of almost 38%. “But hang in there,” the B&H strategist says. “It will come back.”
Well, let’s look at that. Assuming a constant 10% annual return, it would take an investor almost 5 years to recover what was lost. A constant 7% annual return would require 7 years to reach $100,000.
So the B&H investor would have to forgo any income or use of that money for 8-10 years and still would only have their original investment! Are you willing to leave your money untouched for 8-10 years and come away with the same amount you put in? I doubt it. That’s why the B&H strategy can be dangerous.
I believe strongly in investing in the stock market. Even someone who is retired should have a portion of their money protected against rising prices—something the stock market does well. It is vital, though, that seniors employ certain safeguards.
To keep from repeating Barry’s mistake, you need to determine the maximum amount you are comfortable losing. For instance, if you are investing $100,000 perhaps you set a ‘floor’ at $90,000. If your portfolio declines in value to the floor amount, you take action. That way you know you only have 10% of your portfolio at risk
The second point is to make sure this ‘floor’ rises as the value of your portfolio rises. If your portfolio goes up 15%, you’ll want your floor to increase 15%, too. This will help you lock in your gains along the way.
If the value of your portfolio approaches your ‘floor’, determine why. Then sell the investments that are the cause of the drop and reallocate that money some
A positive article about your business in the media is a big pay-off. A published article or broadcast news item is accepted as a media endorsement of your company. The story makes your business more credible than any other advertisement.Cultivating the Media: A small business on a limited budget cannot afford to hire a media relations expert. A one-page document release with a summary of the company news in an interesting and creative manner can catch a reporter’s attention and pave the way for your adve
You see, B&H says that there isn’t any way to ‘time the market’. It also says that if you are not invested for even a handful of days over a 10 year period, that it can significantly reduce your return. Therefore, it’s reasoned, you should stay invested and just ‘weather’ the difficult periods when the market declines in value. “It will come back, just hang in there,” its proponents argue.
This defies common sense. It’s like telling one of my daughters to wear her bathing suit all winter and to stay outside by the swimming pool, because the hot weather will come back next year!
Barry found this out the hard way. After 3 years of staying out in the cold his $750,000 retirement savings were only worth $350,000. His and his wife’s dreams of traveling and enjoying a comfortable retirement were gone. He has been forced to go back to work, hoping to retire again in 4 years.
The reason that B&H doesn’t work well for seniors is because it assumes you have the time to recover from a severe market downturn. But few realize the implications of this belief.
For instance, if you invested $100,000 in the S&P 500 index on January 3, 2000 it would only be worth $62,626 on December 31, 2002, three years later. That’s a loss of almost 38%. “But hang in there,” the B&H strategist says. “It will come back.”
Well, let’s look at that. Assuming a constant 10% annual return, it would take an investor almost 5 years to recover what was lost. A constant 7% annual return would require 7 years to reach $100,000.
So the B&H investor would have to forgo any income or use of that money for 8-10 years and still would only have their original investment! Are you willing to leave your money untouched for 8-10 years and come away with the same amount you put in? I doubt it. That’s why the B&H strategy can be dangerous.
I believe strongly in investing in the stock market. Even someone who is retired should have a portion of their money protected against rising prices—something the stock market does well. It is vital, though, that seniors employ certain safeguards.
To keep from repeating Barry’s mistake, you need to determine the maximum amount you are comfortable losing. For instance, if you are investing $100,000 perhaps you set a ‘floor’ at $90,000. If your portfolio declines in value to the floor amount, you take action. That way you know you only have 10% of your portfolio at risk
The second point is to make sure this ‘floor’ rises as the value of your portfolio rises. If your portfolio goes up 15%, you’ll want your floor to increase 15%, too. This will help you lock in your gains along the way.
If the value of your portfolio approaches your ‘floor’, determine why. Then sell the investments that are the cause of the drop and reallocate that money som
Why do 90 percent of all home based businesses fail? The answer is simple, most home based businesses fail because the people who run the businesses lack persistence. Yes it is true most people are quitters and take the easy way out. This is nothing new, which is why about 10 percent of home based businesses take in about 90 percent of the revenue. If you are struggling with your home based business be sure to stick with it. There is a quote in Think And Grow Rich by Napoleon Hill which states "Winners never quit and
Barry found this out the hard way. After 3 years of staying out in the cold his $750,000 retirement savings were only worth $350,000. His and his wife’s dreams of traveling and enjoying a comfortable retirement were gone. He has been forced to go back to work, hoping to retire again in 4 years.
The reason that B&H doesn’t work well for seniors is because it assumes you have the time to recover from a severe market downturn. But few realize the implications of this belief.
For instance, if you invested $100,000 in the S&P 500 index on January 3, 2000 it would only be worth $62,626 on December 31, 2002, three years later. That’s a loss of almost 38%. “But hang in there,” the B&H strategist says. “It will come back.”
Well, let’s look at that. Assuming a constant 10% annual return, it would take an investor almost 5 years to recover what was lost. A constant 7% annual return would require 7 years to reach $100,000.
So the B&H investor would have to forgo any income or use of that money for 8-10 years and still would only have their original investment! Are you willing to leave your money untouched for 8-10 years and come away with the same amount you put in? I doubt it. That’s why the B&H strategy can be dangerous.
I believe strongly in investing in the stock market. Even someone who is retired should have a portion of their money protected against rising prices—something the stock market does well. It is vital, though, that seniors employ certain safeguards.
To keep from repeating Barry’s mistake, you need to determine the maximum amount you are comfortable losing. For instance, if you are investing $100,000 perhaps you set a ‘floor’ at $90,000. If your portfolio declines in value to the floor amount, you take action. That way you know you only have 10% of your portfolio at risk
The second point is to make sure this ‘floor’ rises as the value of your portfolio rises. If your portfolio goes up 15%, you’ll want your floor to increase 15%, too. This will help you lock in your gains along the way.
If the value of your portfolio approaches your ‘floor’, determine why. Then sell the investments that are the cause of the drop and reallocate that money som
It has been reported by the American Psychological Association that during meetings 68 percent of the participants are thinking about events in their lives unrelated to the meeting. 20 percent of the participants are actually paying attention, and only 12% are really listening.More than likely, you as a salesperson truly understand less than half of what your customer is telling you. Effective listening is critically important to our sales success. Through effective listening we will be in a position to better
Well, let’s look at that. Assuming a constant 10% annual return, it would take an investor almost 5 years to recover what was lost. A constant 7% annual return would require 7 years to reach $100,000.
So the B&H investor would have to forgo any income or use of that money for 8-10 years and still would only have their original investment! Are you willing to leave your money untouched for 8-10 years and come away with the same amount you put in? I doubt it. That’s why the B&H strategy can be dangerous.
I believe strongly in investing in the stock market. Even someone who is retired should have a portion of their money protected against rising prices—something the stock market does well. It is vital, though, that seniors employ certain safeguards.
To keep from repeating Barry’s mistake, you need to determine the maximum amount you are comfortable losing. For instance, if you are investing $100,000 perhaps you set a ‘floor’ at $90,000. If your portfolio declines in value to the floor amount, you take action. That way you know you only have 10% of your portfolio at risk
The second point is to make sure this ‘floor’ rises as the value of your portfolio rises. If your portfolio goes up 15%, you’ll want your floor to increase 15%, too. This will help you lock in your gains along the way.
If the value of your portfolio approaches your ‘floor’, determine why. Then sell the investments that are the cause of the drop and reallocate that money som
Have you ever gone to some ones home that was cooking one of your favorite foods? As the aroma hits your nose, it’s hard not to drool isn’t it? Did you hint how much you liked that food? And if they invited you to sit down and have some of that special food with them, it was a treat, was it not?If you are a big eater like my muscle bound nephew in his twenties, you may have even said, “May I have another serving, please?” (At home he may have three servings if he really likes it!)Visitors on your site a
To keep from repeating Barry’s mistake, you need to determine the maximum amount you are comfortable losing. For instance, if you are investing $100,000 perhaps you set a ‘floor’ at $90,000. If your portfolio declines in value to the floor amount, you take action. That way you know you only have 10% of your portfolio at risk
The second point is to make sure this ‘floor’ rises as the value of your portfolio rises. If your portfolio goes up 15%, you’ll want your floor to increase 15%, too. This will help you lock in your gains along the way.
If the value of your portfolio approaches your ‘floor’, determine why. Then sell the investments that are the cause of the drop and reallocate that money somewhere else, based on your situation, risk tolerance and what’s going on in the market and economy.
Find out more about the dangers of the Buy and Hold strategy of investing and the steps you can take to protect yourself by visiting www.guardingyourwealth.com or by calling 1-877-827-1463.
Mr. Voudrie is a Certified Financial Planner and President of Legacy Planning Group, Inc., a Private Wealth Management Firm in Johnson City, TN.
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