How can I invest without risking a downturn?


Q. Let’s say an individual had enough assets in stocks and bonds to allow them to be comfortable by maintaining the value for the rest of their lives without risking any market downturns. Where should they invest to guarantee no loss of principal and be protected by federal laws?
— Conservative

A. It’s a very timely question given the current volatility in the stock market.

You’re talking about some kind of investment that won’t risk your principal.

But while the risk of losing value in the stock and bond markets is a real risk, it’s not the only kind of risk you need to worry about.

“I can put money into an FDIC-insured bank account so I won’t lose principal, but I am almost guaranteed to lose money on an after-tax basis when you consider inflation,” said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton. “So I’m not sure the goal should be no risk. The better term would be low or reasonable risk.”

As we said, all investment products have risks and benefits.

Lynch offered these examples:

Real estate is very tax-efficient but there is a liquidity risk. Stocks are very liquid but you have little control over your returns. Annuities offer guarantees, but very high fees. Bank accounts may guarantee your principal, but they pay low interest rates.

“I think the key is the balance between everything,” he said. “A good mix will give you liquidity, growth, and tax efficiency.”

So if you want to make sure your money lasts for your lifetime, you should meet with a financial advisor who can help you project how much money your savings will have to earn to give you the income you need for the rest of your life.

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This story was originally published on Feb 25, 2020. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.