A Certified Financial Planner with Navy Federal Asset Management recently discussed with me, many questions about investments and financial strategies. One frequently asked question over the last 18-years is, “What is the best investment right now?” or “What’s working today?”
This is a basic question that many have, particularly during difficult economic times. During recessions or financial turmoil, markets tend to be more volatile. This may be driven by many factors, but a primary one being “fear.”
It’s easy to look at the negative headlines coupled with deteriorating economic data and conclude that traditional investments are too risky. This, together with record low interest rates on fixed income investments (certificates of deposit, bonds, and fixed annuities), has sent many investors looking for other options. Encouraged by spam email and a barrage of advertisements many believe that there is some “secret” investment that is immune or free from any risk and pays far more than current interest rates.
So, what is working today? You may be surprised to find that it is the same thing that has always worked, every time it’s been tried. This incredible investment strategy has been successfully implemented by hundreds of thousands of investors for many decades in every economic environment. It’s commonly available, but, unfortunately, often overlooked, or worse yet, dismissed as being too difficult, boring, or not in fashion.
And what is this magical investment? It is a well-diversified portfolio of stocks, bonds, and other asset classes, matched to your individual risk tolerance, time horizon, and investment objectives, and applied with discipline over the long haul. I know, it does not sound very exciting. You were probably expecting some exotic, “never-before-heard-of” super investment strategy, only used by those “insiders who know the secret.” Sorry, those investments just do not exist. So, how do we go about getting this diversified portfolio?
Your advisor can take the time to understand your goals, objectives, how you feel about risk, your time horizon, and any other issues that may be pertinent to your investment strategy. Next, the advisor will develop a plan designed to take you from where you are now to where you want to go financially, taking the least risk in the shortest time period possible. Next, the advisor will make investment recommendations, designed with your specific needs in mind.
Our Grand Lodge financial advisor can answer these questions and provide us with the information needed to make intelligent investment decisions; however, to diversify – we must eliminate the restrictions in the William’s Digest that prohibits some of the moderate investment opportunities discussed in my recent articles in this series of financial discussions. We must make informed and intelligent choices regarding how and where our Masonic Foundation investments are to be made in the future to grow and yield their greatest earning potential during this depressed period of low interest rates. A diversified approach has over time proven to be the most reliable path toward realization of all long range financial goals.
