June 05, 2021
3 Strategies to Protect Against the Market Volatility caused by the Coronavirus Outbreak
Many thought 2020 would be a volatile year with market volatility.
Most people were looking to the run since 2008 plus a presidential election. Instead, Coronavirus! Learn 3 approaches to protect against market volatility with attorney and advisor, Christopher J. Berry, JD, CELA with www.CastleWealthGroup.com
Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.
Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.
Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.
With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.
For more info visit:
https://castlewealthlegal.com/home
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Episode Transcript
Attacking Volatility
Hey, it’s Chris Berry here and on today’s Berry’s Bites, we’re going to talk about the Coronavirus. Pretty scary out there in terms of the markets. A lot of people have seen the downturn the markets have had with all the volatility people are experiencing right now. Downturn about 20%. And for a lot of clients, we were talking about volatility this year, 2020. We were thinking more along the lines of it being a presidential election year in the fact that we’ve been on a bull run for about 12 years. No one thought the Coronavirus was going to take everything down, but for the clients that have a plan, and that’s really the most important thing is you need to have a plan.
And there’s different ways that we can attack volatility through diversification of types of assets. There’s certain assets that have downside protection, things like fixed index annuities, as well as index universal life. If the market goes down, you don’t lose anything.
Then there’s certain strategies that we use to attack volatility. Where we look at doing what’s called an investment audit, figure out how much risk is in the portfolio versus how much risk are you willing to take on. And we can run some simulations to say, okay, based on how much risk you’re willing to take on we sign a risk score on a scale of one to a hundred. Think of it like a speed limit, the higher the number, the faster you’re going, the more risk you’re taking on, but more of a chance of a wipe out. The lower the score, think of that as driving in a school zone. Chances are you’re going to get there, but it’s going to take you a while. So we can assign a risk score to your portfolio. And then we can sign a risk score to how much risk you’re willing to take on. And if there’s a disconnect there, then we need to look at maybe making some adjustments inside of your portfolio. So that’s another way that we can address risk.
Looking Through Time Horizons
A third way is through time horizons. Breaking up the assets or investments in certain buckets, based on time horizon. Having a now bucket, a soon bucket and a later bucket. With the later bucket, the most aggressive. And then we have a soon bucket that buys us a time horizon between that now and that later bucket. So those are three ways that we can look at addressing risk in this volatile times.
One is through the types of investments we use, where now we might look at things that have downside protection. CDs, multi-year guaranteed annuities, fixed index annuities, index universal life.
Second, making sure that the money that we do have in the market is invested in such a way we’re comfortable of figuring out what that risk score is.
And then third, looking at time horizons as strategies on how to protect against that volatility. So those are the three ways that in this volatile market that we can address risk. And if you do have questions or want us to analyze your portfolio, then just reach out to us, give us a call. Look forward to helping you. This has been Chris Berry with another Berry’s Bites. Take care.