By: Bill and Cindi Porter, AILERON INVESTMENT ADVISORS
Q: How will the stimulus programs affect my future investment strategies?
A: Multiple considerations can be important to consider. First, is the reminder that the markets do experience major setbacks from time to time. After 11 years of a generally up market, many people forgot that “risk taking” is a real concept. For long-term investors who have the emotional strength, adequate alternative liquidity, and the understanding that the stock and bond markets can be a roller coaster, “risk taking” has generally been a rewarding option. However, it is not for everyone, and for those who do plan to use the markets going forward, the important question is: How much of my portfolio do I want to have “at risk,” and how much should “not be at risk”? The answer is unique to each investor, but it is imperative that one consciously answers those questions AND adjusts as circumstances change.
Second, and seemingly contradictory to the first consideration is the main answer to the reader’s question. The federal government is spending trillions (that it does not have) to help deal with the fallout from the Coronavirus. The government and Federal Reserve are simply writing IOUs, so it can “look good on paper”. However, the extra unfunded trillions are future inflation seedlings being spread across America. As a result, investors may need to earn returns that will exceed the future rate of inflation – or potentially lose purchasing power. Banks are currently paying nearly nothing in interest rates, but historically the stock market has outpaced inflation1. While the rollercoaster may be uncomfortable for many investors, some level of long-term market exposure may become a necessity just to help protect the value of the money you already have. Fortunately, there are multiple investment tools available to.
A serious conversation with your trusted advisor about various options is highly recommended.
This is for education only. Before using this information in any way discuss it with a financial professional. There are many risks associated with stock trading. You may lose some or all of your financial investment. Securities offered through Dempsey Lord Smith, LLC Member FINRA/SIPC. Securities offered through Integrated Financial Planning Member FINRA/SIPC. Advisory services offered through Dempsey Lord Smith, LLC. All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.
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All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.