| |
It’s time someone stands up and
says it: The Buy and Hold philosophy of investing is
inherently dangerous for those who are retired or near
retirement. It is responsible for literally millions of
retirees being forced to go back to work. Yet the Financial
Services industry, whose profits are built on the Buy and
Hold philosophy, refuses to make changes necessary to better
serve these investors.
Let’s face the facts. Someone who invested $100,000 in an
S&P 500 index fund at the beginning of 2000 and left it
alone would have less than $78,000 today, over four and a
half YEARS later!
Invariably, investors called their brokers because they were
concerned about their money losing value. Almost every time
they heard the worn out mantra, “Just hang in there, it‘ll
come back.”
Sure, but how long will the investor have to wait? Five
years? Ten years? That may be fine for someone who is 20 or
30 years old and is saving for retirement. But people who’re
retired can’t forgo a return on their investment for 10
years!
For most of them, the gain off their nest egg is what
supplements Social Security. They depend on their nest egg
to maintain the comfortable lifestyle they worked and
sacrificed so long to achieve. It’s the money they use to
travel and buy gifts for their grandchildren.
What’s more, they’re tired of standing by and watching their
broker do nothing while they lose 30% of their hard-earned
money. Because their financial advisor failed to take
action, they’re the ones paying the price.
I speak with people all across the country that are retired.
Each of them feels BETRAYED by their financial advisors.
They are frustrated that their brokers just don’t get it—the
brokers don’t understand.
Here’s just one example: If you tell a broker that you want
your investment to go up when the market goes up they
consider you a growth-oriented investor. The way they see
it, if you want an investment that has the potential of
going up 20% in the good times then you’ll also be
comfortable with that same investment going down 20% during
the bad times.
That’s not what my clients mean when they say they want
their money to grow! They mean they want their money to go
up in the good times but they don’t want to lose it during
the bad times. The industry sees that as you changing your
objective. I see it as common sense!
The fortunes of the financial services industry depend on
the Buy and Hold philosophy. It is to their advantage that
investors believe and follow that philosophy. If investors
don’t, it could force the industry to have to change the
entire way it does business.
Currently, the people who manage your money are separated
from you by the people designed to sell you investment
products. That’s the problem. You expect your broker, agent
or advisor to watch your money and to make changes to help
you protect it in the bad times. That’s not their job. They
aren’t trained to make those decisions. In fact, the
efficiency of the system is based on them NOT making those
decisions.
If you believe in Buy and Hold then your broker, agent or
advisor doesn’t have to know how to manage money. If you
believe in Buy and Hold, the broker, agent or advisor
doesn’t have to spend time watching your portfolio. Instead,
they focus on selling product. Unless the financial services
industry recognizes the extent to which investors are
dissatisfied, they risk alienating the very people they are
supposed to serve.
Innovation isn’t dead, though. For instance, my firm has
developed solutions designed to grow wealth during the good
times while significantly limiting the potential for loss.
We’ve invested tens of thousands of dollars developing
proprietary systems that allow us to manage your money. Our
approach is so unique that 5 Patents are pending before the
U. S. Patent and Trademark office.
So, if you’re retired, beware of the Buy and Hold philosophy
and those advisors who follow it. It’s your money and
lifestyle at risk, not theirs.
Do you have a financial question? Contact me for clear,
unbiased advice free of charge.
Mr. Voudrie is a Certified Financial Planner, nationally
syndicated columnist and the President of Legacy Planning
Group, Inc., a Private Wealth Management firm in Johnson
City, TN. For more information call 1-877-827-1463 or email
jeff@guardingyourwealth.com.
|
|
|
