The following is a guest post from Jay Tyner, president and founder of Semmax Financial Group
The ongoing market volatility we have seen recently is a scary and frustrating time for many investors, regardless of their age and risk tolerance. More young people are considering pulling out of the market to focus more on safe investments and preserving their assets.
With so many investment options and strategies to choose from, opting out of the craziness may seem more confusing than staying put. However, some of the more obvious investments, such as ETFs and guaranteed income vehicles could help you overcome the market volatility.
Have a Conservative Income Portfolio that is Actively Managed
Having a conservative income portfolio is great for those who do not wish to experience large swings in portfolio value. To achieve this type of portfolio, consider using an ETF. An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock or an exchange. ETFs also track economic and market conditions, indicators and trends while dynamically adapting to changing market conditions.
Although an ETF does a lot of the monitoring, it is also important to actively manage a portfolio, allocating capital to the most attractive asset classes, while avoiding the least attractive asset classes. An asset class breakdown is placing a percentage of an investor’s holdings in different types of investments, such as large stocks, international, bonds, etc.
Allocating assets to the most beneficial classes allows investors to have a consistent and positive investment performance. Moreover, assets should be reallocated based on your risk tolerance into diversified classes that will provide the most attractive risk-adjusted opportunities for income, capital appreciation and principal protection.
Invest in Guaranteed Income Vehicles
Another way to beat market volatility is to invest in vehicles that provide a guaranteed income stream. One option that can provide you with money throughout retirement is income annuities.
Although annuities have a negative reputation among some investors, their popularity has recently increased in light of the market ups and downs. Annuities are known to provide investors with a guaranteed income for life, which is great for current and aspiring retirees who are seeking asset protection and financial security.
Certain annuities can be selected that have no ties to the market and it is simply a contract between you and an insurance company. The way an annuity contract works is you make a lump-sum payment or a series of payments and in return, the insurer agrees to make periodic payments to you beginning immediately or at some future date.
This is a great way for you to have a secured income throughout your retirement, without worrying about the market’s future and losing your capital.
The market’s instability may continue for some time, but don’t let it stop you from achieving your retirement goal. If you need help setting up a conservative income portfolio and don’t have the time to manage your investments, consider seeking a financial advisor. Take control of your financial situation today and use the appropriate investments that best fit your risk tolerance.
Jay Tyner is president and founder of Semmax Financial Group, with locations in Greensboro, NC and Winston Salem, NC. He has over 20 years of financial experience, specializing in investments and retirement planning for pre-retirees and retirees.