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The Nature of Risk

When you invest money, you are putting it at risk — all investments can lose money. The key is to gauge your risk, and to not put more money at risk than you are willing to lose.

This is a relative concept. If you have only $10,000 to invest, then putting $9,000 in a high-risk investment means you could lose almost all of your savings. However, if you have a million-dollar portfolio, putting $10k in a high-risk investment would not be considered all that risky, because a loss of $10k wouldn’t obliterate your portfolio.1

As you can see, evaluating risk is just as personal as your financial goals. In fact, defining your financial goals — how much money you need based on what you want it to fund — is a main factor in establishing your risk tolerance, as is determining your timeline. If you are young and don’t need your investment money for 10 years or more, you can afford to invest in more aggressive holdings than if you need it in six months. The longer you hold an investment, the more time it has to recover from temporary setbacks.

The final risk consideration is just how much you can stomach when it comes to market volatility. If you get nervous when the market declines and keep checking your portfolio every day, you may be better off with a more balanced portfolio. If you would like a professional evaluation of your risk profile based on these factors, please feel free to contact us. Determining your tolerance for risk, your financial goals and timeline for achieving them are essential first steps to creating a suitable investment portfolio.

In addition to your personal approach to risk, it’s important to understand the various types of risk that exist in investment markets. For example, if you invest in bonds, you need to pay attention to credit risk, measured by independent ratings agencies that determine the viability and financial strength of various bond issuers. Each receives a rating from the agencies based on the likelihood that the issuer may default on bond payments. The higher the rating, the more reliable the issuer. Lower-rated issuers may pay out higher yields on their bonds to make up for the higher risk.2

Risk ratings address more than the ability to deliver on financial obligations. Take Russia, for example. Once the war on Ukraine began, the U.S. and other countries imposed widespread sanctions on Russian companies and individuals, basically freezing their ability to do business outside of the country. As a result, Russia’s ratings dropped because its companies lost their ability to trade with global partners, reducing potential revenues and increasing investor risk in those companies — in both stocks and bonds. The Russian government itself was downgraded due to weakened ability to pay debt obligations,3 as were Russian insurance companies.4

There are strategies that investors can deploy — such as diversification, strategic asset allocation and periodic rebalancing — to help mitigate investment risk. But ultimately, investment risk may not go away entirely. Leveraging a small amount of money to potentially earn a higher amount is the basic premise of investing, and it always has the potential to incur risk.

TD Ameritrade. January 10, 2022. “Risk Management: The Un-Fun, Must-Know Part of Trading.” https://tickertape.tdameritrade.com/trading/options-risk-management-18874. Accessed April 10, 2022. Fidelity. “Bond Ratings.” https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/bond-ratings. Accessed May 4, 2022. Bill Chappelle. NPR. March 3, 2022. “Russia’s credit rating is cut to junk, and the dollar hits a new high vs. the ruble.” https://text.npr.org/1084177384. Accessed April 10, 2022. Fitch Ratings. March 14, 2022. “Fitch Downgrades 6 Russian Insurers.” https://www.fitchratings.com/research/insurance/fitch-downgrades-6-russian-insurers-14-03-2022. Accessed April 10, 2022.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Asset allocation or diversification does not ensure a profit or guarantee against loss; it is a method used to help manage risk.
 The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.
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Balancing Real Life with Caregiving

During 2020, more than 65 million American women provided unpaid care for their children, family members and elderly relatives.1 It’s easy to imagine that many of them likely juggled caring for a combination of these types of dependents. If you’ve ever provided ongoing caregiving duties for a parent, partner, child, sibling or someone else, you may recognize common feelings of being overwhelmed, exhausted, out of your depth and even somewhat resentful — and then feeling guilty.

Everyone has different circumstances, but when the caregiving begins to interfere with your mental, physical and/or financial health, you should re-evaluate how you might be able to manage better. In most cases, it is possible to get help if you’re willing to ask.

We can help by becoming your partner for long-term financial planning with insurance products — for both your caregiving charge and your own finances. Please give us a call if you’d like to learn more. In the meantime, the following are some tips to help you balance the burdens of caregiving with the rest of your life.

Establish a Team

You may already have a network of people in your life who can help. They may not initially offer because they believe you have everything under control or because they don’t realize you could use some help, or they don’t want to share that burden. Regardless, you should choose people you know have the capability and ask each person to take on at least one aspect of your tasks. This may include helping with medical issues, legal issues, caregiving supervision/scheduling and financial management.

Help Everyone Become More Independent

Caregiving may become overwhelming because it can feel like too many people in your life are depending on you. It’s important to encourage independence among friends and family so that you don’t become overwrought. You can start with your caregiver charge, by not getting into the habit of doing things that he can do for himself.2

That approach should also work for your family. Explain that you will always be there for them, but not to do everything for them. In time, even small children can learn to fix a bowl of cereal and your teenagers can find their own cleats/ballet bag/homework somewhere in the house — or at least look first before asking for help. Likewise, husbands and wives can work on better interdependence by establishing healthy boundaries, actively listening to each other, making time for personal interests, and taking personal responsibility for their own behavior.3

Schedule Regular Time for Yourself

Regular exercise is important, as well as attending routine check-ups for your health so you have the stamina to juggle your life and caregiving duties.4 Pursue goals or activities you want to try, such as yoga, golf lessons or learning to play a musical instrument. Join a gym or book club or regularly meet up with friends — even when you feel tired — because it will likely energize you. Look for opportunities to laugh often. Spend time by yourself and with people you like. Whatever your passions, don’t lose sight of them. You must do the things you love to nourish your soul and replenish your strength to handle all of life’s responsibilities.

It’s like being on an airplane and putting on your oxygen mask before you help someone else. Doing one small thing for yourself can make you more able and responsive to others.

Get Help When Needed

The stress and even depression associated with caregiving is real, debilitating and highly prevalent throughout today’s society. When you need help, do not hesitate to speak with a mental health professional who can help guide you through your feelings and develop coping strategies. Consider resources you can rely on for when you absolutely need a break, be it another family member, caregiver service or adult daycare center.5

Commune With Other Caregivers

Consider joining a caregiver support group to help recognize that you are not the only one with these burdens. In fact, you have likely developed skills and knowledge that can be very helpful to other caregivers in the same situation. And, when you share your experiences, you may find others who can offer knowledge and resources that help you in turn.

1 National Partnership for Women & Families. May 2021. “Women Carried the Burden of Unpaid Caregiving in 2020.” https://www.nationalpartnership.org/our-work/resources/economic-justice/women-carried-the-burden-of-unpaid-caregiving-in-2020.pdf. Accessed March 22, 2022..Jackie Gillard. Today’s Parent. Sept. 29, 2020. “Help yourself! 8 tips for teaching kids to be more independent.” https://www.todaysparent.com/kids/teaching-kids-to-be-more-independent/. Accessed March 22, 2022.
Jodi Clarke. verywellmind. July 26, 2021. “How to Build a Relationship Based on Interdependence.” https://www.verywellmind.com/how-to-build-a-relationship-based-on-interdependence-4161249#toc-how-to-build-an-interdependent-relationship. Accessed March 22, 2022.
American Heart Association. Oct. 25, 2021. “Top 10 Caregiver Tips for Maintaining Health and Well-Being.” https://www.heart.org/en/health-topics/caregiver-support/top-10-caregiver-tips-for-staying-healthy-and-active. Accessed March 22, 2022.
Mayo Clinic. March 22, 2022. “Caregiver stress: Tips for taking care of yourself.” https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/caregiver-stress/art-20044784. Accessed March 22, 2022.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
 The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. 4/22-2105671B
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Retirement Makeover

Many babies born today in the developed world are expected to live nearly 100 years.1 Given the vast changes over the past two decades in medicine, technology and the ways we work, communicate and even entertain ourselves, it’s almost hard to imagine how different life will be in 100 years.

While we won’t be around in 100 years, it’s an interesting perspective to assume while making our own retirement plans. For example, many young adults early on in their careers will make decisions (e.g., higher education degrees, skills training, extra certifications, taking low-level jobs or lower pay for better experience, etc.) that they are counting on to advance their careers further when they are in their 30s, 40s and 50s.

That’s the kind of thinking we need to engage in when considering retirement in the future. For example, adopting healthy eating and exercise habits early on are ways we can keep our aging bodies fit and maintain mobility in our later years. These efforts may contribute to lower health care and long-term care bills. Also, making decisions about how to position our assets for long-term growth and a reliable stream of income can help hedge the risk of outliving our savings during a long retirement. We can introduce you to a range of insurance products designed to do just that and help you determine which ones would best suit your circumstances. Feel free to contact us to learn more.

Worldwide, people are outliving their money, on average, by anywhere from eight to 20 years.2 There are plenty of people — and you may even know some — who lived a solid middle-class lifestyle throughout their lives but are now living in Medicaid-sponsored nursing homes because they cannot afford full-time care in their own homes. This is a tough scenario to think about, let alone plan for, but consider the contributing factors. Although concerns about the shrinking Social Security Trust Fund have taken a back seat to the COVID pandemic, the war in Europe and political priorities, it remains in trouble. Furthermore, the pandemic has strained our health systems and exposed just how vulnerable older adults, in particular, are within the health care spectrum.

It is important to consider — now — how to redesign the traditional retirement for stronger financial resilience, to be healthier and less reliant on public resources, and even be happier. After all, if you could live to age 100 or more, it’s important to plan on ways to enhance your quality of life. Part of your planning process should include taking inventory of not just your tangible assets (e.g., savings, property) but also your intangibles, such as health, relationships, knowledge and abilities than can help you continue to earn income even if you have mobility issues.

After all, working from home appears to be a phenomenon here to stay. Consider how you can work your way into a longer career path by adapting your skills and experience to a work-from-home model. For example, teaching/coaching, gig/consulting work, organizing/participating in the sharing economy, or making and selling your wares.

These are decisions and actions you can take mid-career — like those we make as young adults to further our careers. And consider the perks, such as no longer having to report to a contentious boss. In an ongoing study that covers decades, Gallup reports that the majority of employees quit their jobs due to their direct manager, not because of the company itself.3

If you love your job but hate your boss, consider that today, more than 90% of employers report that productivity has remained the same or even improved with the remote work model. Given today’s strong jobseeker’s market, now is the time to consider negotiating more flexibility for your work life in order to allow you to work longer to earn money for retirement while at the same time enjoying your job more than you do now.4

Can you retire now? If you can, should you? If your retirement could potentially last 20 or 30 years, would you get bored no longer having specific work responsibilities? Author Ken Dychtwald refers to retirement as “Life’s Third Age.” He encourages people to think about how they can continue to grow, learn, meet new people, try new things and even discover a new purpose for living. Possibilities include going back to school, starting a nonprofit, learning to play a musical instrument, learning a foreign language, or writing a memoir for your children and grandchildren.5

Abhinav Chugh and Martha Deevy. World Economic Forum. Jan. 19, 2022. “The 100-year life is here. How can we meet the challenges of longevity? An expert explains.” https://www.weforum.org/agenda/2022/01/the-100-year-life-is-here-how-can-we-meet-the-challenges-of-longevity-an-expert-explains/. Accessed April 6, 2022. Andre Belelieu and Yvonne Sonsino. World Economic Forum. Aug. 3, 2020. “Coronavirus is creating retirement insecurity. These 10 steps can defuse the timebomb of an ageing population.” https://www.weforum.org/agenda/2020/08/here-are-10-steps-to-diffuse-the-timebomb-of-an-ageing-population-post-covid19/. Accessed March 8, 2022. Sarah Korolevich. GoodHire. Jan. 11, 2022. “Horrible Bosses: Are American Workers Quitting Their Jobs Or Quitting Their Managers?” https://www.goodhire.com/resources/articles/horrible-bosses-survey/. Accessed March 8, 2022. Mercer. 2022. “Reinventing for the new shape of work.” https://www.mercer.com/our-thinking/career/the-new-shape-of-work.html. Accessed March 8, 2022.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom-suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

 

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