Isn’t it amazing what is happening in the markets in 2020? How is our country going to deal with all of this? How many times will Americans be okay with losing 30, 50 or even 70 percent of what they’ve made to Wall Street before they finally say enough is enough? Doesn’t it usually happen about every six to eight years?

People need to build financial strategies, so they don’t lose money. That’s right grow your money without losing it. Sometimes people think planning is about an asset allocation or chasing a rate of return; it’s more about capital preservation minimizing risk. It’s not what you make; it’s what you keep. And you know what? Prior to this pandemic everything was okay, the economy was stable, the stock market was strong and real estate was holding up. The problem isn’t that stuff happens. The problem is that stuff happens, and people aren’t ready for it.

Today the pandemic happened, and people want to look at the past to solve the problems of the future. People need to have contingent plans in place so when something like this happens, they are prepared.

Lessons learned from the financial ghosts of the past:

• Create liquidity- Create liquidity. Have money accessible in a bank savings account or a mature limited pay whole life insurance policy. Don’t always focus on a rate of return.
• Protect against inflation- Look at fixed indexed annuities. Bank savings accounts, CD’s, and fixed annuities cannot keep up with inflationary pressure. FIA’s ensure that any premium invested is protected from market downturns. Bonds, variable annuities, mutual funds, and stocks do not offer principle or premium protection, so they can all lose value.
• Protect against increases in taxes, both state and federal- Invest in post-tax investments so the money won’t be taxed in the future.
• Protect against market risk- Have strategies and investments in place. For example, a buffer strategy will help an investor if the markets fluctuate and they need money. They can draw money from an asset that is not correlated to the markets. Having a 4- or 5-year buffer will reduce the risk of running out of money.