Are You Prepared for a Market Crash?
Below are some excerpts from an article by Jack Waymire that I found very interesting and useful. I think this information could help you, the investor, with a more successful retirement.
Wall Street Business Practices Damage Baby Boomers Who Plan to Retire in the Next Few Years
How real is another Bear Market? I would say it is very real when you factor in unfunded public pension plan liabilities, European countries defaulting on debt, slow growth in the U.S. economy, post-election volatility, and the instability of the Middle East. Any number of factors could trigger a market decline. A combination of events could cause a severe market decline.
Whether you are retired or still have some time left, there are 7 steps you’ll want to follow to protect your assets.
How can you minimize the impact of the next stock market meltdown? Your best bet is to follow these seven steps.
(1) You need a competent, ethical advisor who puts your financial interests first. Competent advice is critical.
(2) The advisor should be a financial fiduciary who is compensated with fees.
(3) Make sure your portfolio is properly diversified – invest in a minimum of five assets classes and more is better. Select asset classes that do not go up and down at the same time.
(4) You have to monitor expenses to make sure they are reasonable. Every dollar of expense is one less dollar available for reinvestment.
(5) Make sure your exposure to investment risk does not exceed your tolerance for risk.
(6) Require quarterly performance reports so you know your results before and after the deduction of expenses.
(7) Compare your results to the performance of a benchmark that is produced by an independent third party. Make sure you are earning competitive returns that are consistent with your tolerance for risk.
When safe, secure retirements are at stake, it pays to hope for the best, but plan for the worst-case scenario. Remember, diversify, diversify, diversify.
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