Stock Market Volatility Likely to Continue
In my experience people make investment decisions based upon prevailing sentiments or the economy or the stock market at any given point. Unfortunately, this is what causes most people to make major mistakes. As a professional trader I observed daily people buying when stocks were at all-time highs. And everyone wanted to sell when they were at all-time lows. They did the exact opposite of what they should have done.
The extreme stock market volatility we’ve experienced in the past ten years is likely to continue for the next ten. Unfortunately, traditional financial planning has not yet adjusted to the new realities. Traditional financial planning no longer shields clients from burdensome taxes. It does not hedge against inflation. It has no solution to deal with market volatility—just a worn-out cliché: “You’re in it for the long haul.” It offers no guarantee of principal and very little liquidity.
Fortunately, indexing provides products and strategies that allow you to take an objective, strategic approach to balancing risk and return. The goal is to buy into something where we know the worst-case scenario and we know that we have an upside. This strategy is achieved primarily through indexed universal life insurance. This product is typically is linked to the S&P 500, which is a raw measure of the overall market and economy, taking established companies, various industries and sectors, and showing their performance over time. The core of the product is that when the index is up, you make money, and if it’s down, you will not lose money. It locks in your gains using an annual reset.
Using such a product makes your cash accumulation systematic and strategic. It removes emotions and gambling from the equation. It preserves principal and keeps your hard earned cash liquid. I haven’t even mentioned taxes yet, but hopefully you will look into it further for yourself. It has served me well!