Avoid Stock Market Burn (12-03-2014) | First Business News Transcript
Angie Miles: Hedge funds are not alone in getting burned by the stock market it can happen to anyone. Joining us on set this morning James Brewer of Envision Wealth Planning. Good morning to you.
James Brewer: Well good morning to you thanks for having me
Angie Miles: Well the idea is to buy low and sell high but I know a lot of Americans out there who have been burned by the stock market. They now fear putting money to work in stocks what have you seen out there.
James Brewer: I’ve actually seen the very same thing. Many times people buy a fund it’s got a really nice name and I say well what actually is in that fund? And sometimes they think it sounds like it’s of America but yet its got all kinds of international. It could have a hedge fund. They have no idea.
Angie Miles: And then they get burned.
James Brewer: Yes.
Angie Miles: So what is your strategy as a financial planner? What are you telling your clients to do in this environment that we have going right now with the stock market going higher and bond yields struggling.
James Brewer: Well one of the things I tell everyone is first let’s figure out how much money you need at the end of the rainbow. I use a strategy that says let’s calculate the savings, what kind of risk or asset allocation you need and the time. Once we have that, then we can come back to figure out what should the investing strategy be.
Angie Miles: What are you telling your clients now about bonds. Because people see that as a safe haven. But there’s almost no return in some cases here.
James Brewer: I think we really like the name safe haven, but historically if you are going to get return out of something there’s gotta be some risk. But the question should be where should your risk be? Personally I believe that the risk should be more on the stock or equity side. There’s research that shows historically that’s where you are going to get to get some really good returns. And that if you look at potentially you know short-term government bonds or some other types of bonds that simply actually get rid of the volatility, then long-term I find that more people are comfortable with that somewhat predictable pattern of returns.
Angie Miles: Got it. So heavier on the stocks right now a little bit lighter on the bonds but you still need them to smooth everything out.
James Brewer: Yes, yes
Angie Miles: Good to have you here. Thanks for coming in
James Brewer: And thank you again
Investing in all securities involves risk, including possible loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Bonds are subject to availability and bond yields are subject to change. Certain call or special redemption features may exist which could impact yield. Government bonds are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. No investment strategy assures a profit or protects against a loss. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.