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How Can I Get Consistent Investment Return In Uncertain Times?

March 18, 2020

A lot of our clients come to us because they are seeking consistent returns and consistent yield in uncertain times.

In other words, we have an election this Fall in 2020, we have coronavirus going on, we have the whole tariff deal with China, a lot of uncertain times and that will continue to be the case probably for the rest of our lives. That effects our money and how we invest.

So we want to have certain amounts of monies and buckets at risk in the market for long term growth, but want to have certain amounts of monies and buckets set aside for uncertain times that have downside protection safer strategies where they can give you sleep insurance, if you will.

So I wanted to show you an example today of the S&P 500 side-by-side the JPMorgan mosaic index. The JPMorgan mosaic index is a multi- asset index that we use. A lot of our strategies are safer strategies that can pair well with your stock strategies and your at-risk strategies.

If you’ll notice here, the S&P 500, we call it a strikeout by homerun strikeout index. In other words, you can have a 30% return year like we all did last year in 2019, and you can also have a strikeout year like 2008, where you lose 39%, you know 40% of your money in one year, so all of our money can’t be or shouldn’t be in an index where we’re hitting a homerun and having a strikeout.

Some of it should be set aside for the singles and doubles. I’m a huge baseball fan! I played baseball in college and I love baseball. I’m a Washington Nationals fan and you’ll see here, this index over here – it being a multi-asset index it’s hitting the singles, doubles, and it’s complementing the homeruns strikeout index really well.

If you look at the JPMorgan mosaic it’s a multi-asset index with stocks, bonds, and commodities, all-in-one indexed 0rebalanced every 30 days, and the return in the yield from 96 to 2019 was 6%. Not bad for safer strategy where we have downside protection built in.

The S&P 500 in that same twenty two year period of time did 6.8% not including dividends, so you’re looking at maybe 8.8 to 10-11% return in the S&P 500. But again, what comes with a thirty percent return can come a thirty percent loss.

Let me show you another chart so you can see these side-by-side. Here’s how you want to pair your at risk investments with your safer strategies.

We all know the market’s going to hit the homerun from time to time. It’s also going to have the strikeout in losses. Here hits a homerun we all know that in 2008 the market had a major strikeout and we all know that since 2008 the market’s been straight up, matter of fact, the top of the market.

You know we’re hitting all-time historic market highs again in 2020. What you have got to avoid and eliminate in retirement are these downturns right here. You can’t have that especially in the drawdown phase when you’re withdrawing money out of your retirement accounts.

If you have safer strategies built in with your at risk strategies that’s been proven by Nobel prize-winning economists and people way smarter than us to create the optimal portfolio a retiree can create.

So if you’d like more information about creating your own optimal portfolio give us a call, shoot us an email, visit our website, just reach out to us and let us know you want a “where do I stand plan”: a complimentary second opinion on everything you’ve done for your retirement.