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Preventing Losses vs. Picking Winners 

We have a daily saying in my office: “There is more opportunity in preventing losses than in picking winners.” In fact, I say it so much that even my family can recite it on cue. Its my mantra. And, its the truth. 

The question is: Is it better to have a steady, reliable, and reasonable gain you can count on OR to ride the waves of the market, with uncertainty, fear and worry? Time and time again, those who secure their assets, who make a smart, safe, and conservative plan for their money, and who prevent losses, ultimate win in the end. Just look at what happened in 2008. Millions of retirees still haven't recovered. 

“But What About When The Market Goes Up?”

 

Because I have this “safe-and-secure” approach to retirement planning that often doesn't reply on the stock market, sometimes clients will worry about “missing out” on market increases. They (understandably) want to maximize their money, and get the best return they can on it. But there are two problems with replying solely on market conditions in your retirement: 

(1)   Completely Unpredictable – Sure, there are hundreds of so-called “market experts” and “sage advisors” who love to make forecasts about what they think the market will do. But do any of them REALLY know what's going to happen? Are they betting their OWN money on it? To a large extent, the market fluctuations are based on worldwide financial conditions, the peace (or lack thereof) in foreign affairs, and quite simply, human behavior. Do you want to be betting your financial security on these unpredictable factors?

(2)   There's A Downside – What goes up must come down. And, it does, indeed, come down. Sometimes there are many years in between such fluctuations, other times, they are back to back. (We had two pretty major “downs” in the market within just one decade.) When you're close to (or in) retirement, you can't afford to take these kinds of risks. 

The Plan That Protects

When you focus your retirement planning on protecting your assets and your income from those downturns, you give yourself peace of mind. While it’s true that you may not have those “big win” stories at parties, you will definitely have the “this downturn didn't affect us at all!” story when the market turns. That kind of story not only gives you bragging rights, but also gives you the ability to really, truly enjoy your retirement without fear. Preventing losses is better than picking winners, not only for the tried-and-true financial reasons, but also for the joy you get from being able to live the life you want, no matter what happens in the markets.

Posted 7:27 PM

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