RECESSION
AND DIVERSIFICATION
Are we in a major recession, a mild recession, or just a
slump?
Whatever you want to call it, diversification certainly counts.
Presented by The
Clark Financial Group, LLC
Investments uncorrelated or indirectly correlated to the stock market
– such as CDs, Treasuries and annuities – are
getting another look these days. Here’s a look at some of the
options before investors.
Banking on the future.
Under recessionary conditions, short-term CDs, money market accounts
and Treasury notes sometimes appeal to those who want to receive a
competitive yield versus stocks and bonds over six months or a year
with less risk. Treasuries are also free from state income tax, and
some Treasuries are TIPS (Treasury Inflation Protected Securities),
meaning they are hedged against inflation. The comparative certainty of
all these investments appeals to people seeking diversification.
Bonding together.
In this kind of economic climate, some investors may also be attracted
to bonds and bond funds. Bonds, after all, offer the investor a
reliable payment stream and repayment of principal (based on payment
ability or solvency of issuer). Besides municipal and government bonds,
there are also corporate bonds, including fixed-rate capital securities
offering predictable monthly, quarterly or semiannual income. Some
investors like short-term bond funds, which typically invest in
commercial paper, bills, and certificates of deposit. Often, bonds
funds generate monthly income, and some allow check-writing so people
can meet emergency cash needs. Some exchange-traded funds (ETFs) are
bond ETFs, which tend to favor investment in inflation-protected bonds.
A contractual choice.
Annuities are another type of investment with little or no correlation
to the stock market. Under these contracts, you make payments to an
insurance company which in turn agrees to make payments to you,
immediately or in the near future. A fixed annuity offers
“guaranteed” income payments and a
“guaranteed” rate of return
(“guaranteed” by the insurance company, that is,
not the FDIC or SEC). A variable annuity usually allows you the choice
of stock market participation (usually via mutual fund investment) with
possible protection of your principal. An equity-indexed annuity offers
returns tied to an equity index, but with a minimum rate of return
“guaranteed” by the insurer.
Is it time to diversify?
You may want to learn more about these investments, and others that may
help you modify your portfolio for a recession or downturn, including our bear market option strategies. Before you
make any investment decision, be sure and talk with a qualified
financial advisor.
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The Clark Financial Group, LLC
7300 W 110th St Suite 700
Overland Park, KS 66210
Phone: (800) 797-1979
Email: cclark@brokersXpress.com
Charles Clark is a Representative with brokersXpress, LLC
and may be reached at www.clarkfinancial.com
, (800) 797-1979 or cclark@brokersxpress.com
. Securities offered through: brokersXpress, LLC,
Member FINRA/SIPC
a Registered Investment Advisor
Corporate Office: 311 W. Monroe Street • Suite 1000 •
Chicago, Illinois 60606
www.brokersxpress.com • 888.280.7030
These are the views of Peter
Montoya, Inc., not the named Representative or Broker/Dealer, and
should not be construed as investment advice. Neither the named
Representative nor Broker/Dealer gives tax or legal advice. All
information is believed to be from reliable sources; however, we make
no representation as to its completeness or accuracy. Please consult
your Financial Advisor for further information.
Citations.
1 usatoday.com/money/economy/2008-01-10-bernanke-interest-rates_N.htm -
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