An article from U.S. News & World Report profiled the condition of new retirees 10 years after the Great Recession and found it to be a mixed bag; some retirees were doing fine, while others remained in rough shape financially. The markets have soared since they plummeted more than 50% between 2007 and 2009, but that downturn was a permanent kick in the teeth to many investors, particularly those looking at retiring in the years immediately following the collapse.
One financial planner featured in the article suggests those who suffered were victimized, in part, by circumstances out of their control. The piece noted, “Even those who thought they had appropriately diversified their investments saw significant losses.”
That’s one of those sentiments that drives me nuts – the idea that when the markets grow weak, there’s essentially nothing you can do but take the portfolio abuse. It’s fatalistic and completely wrongheaded. It’s also dangerous, because it discourages investors from taking the kind of useful action that’s been shown to protect portfolios even in the worst economic environments.
It’s said that bull markets don’t die of old age, but are killed by rising interest rates. It can just as fairly be said retirement portfolios that ultimately fail to fulfill long-term goals are crushed as much by investor inaction as by slumping equities.
Tangible Precious Metals: A Proven Ally When Markets Go Bad
When popular, mainstream assets are suffering, other asset classes rarely suffer right along with them. For example, when the S&P 500 sank more than 50% from October 2007 to March 2009, gold climbed nearly 30% over the same period – but that was just the beginning for precious metals during that period. The stagnant economy soon rewarded those who made the move to metals with much bigger returns. By April 2011, gold had climbed 110% and silver shone even brighter, rising close to 270%.
These returns were of no benefit, however, to those who did not make the little bit of effort it would have taken to move at least a portion of their portfolios to gold and/or silver. Americans hold roughly $30 trillion in retirement accounts, and practically all of that is in some type of paper asset. Yet the World Gold Council just released research that shows adding as little as 2% gold to a portfolio improves the risk-adjusted returns of that portfolio – and the more gold added, the more improved the returns.
If you’ve not made the move to protecting your account with precious metals, do you know why? It surely can’t be because ownership of physical gold and silver doesn’t offer real protection. The data proves otherwise. Is it that you still don’t feel confident of your knowledge of precious metals? Or because your financial advisor, who can’t make any money selling metals, says they’re a bad idea? Maybe it’s as simple as the fact that you just haven’t made the time and it’s something you’ll get to “later.”
Vulnerable Market Exposes Retirement Portfolios to Great Investment Risk
As recent market behavior has shown us, “later” is now here. Even though it appears equities have recovered some from the tremendous volatility that characterized much of last year, shrewd investors know the waters are anything but safe.
The underlying economic influences that served as the source of the recent upheaval haven’t gone anywhere. Moreover, the current bull market, which remains grossly overvalued as indicated by a plethora of respected metrics, is long overdue for a fall much greater in size than the corrections it suffered over the past year.
The stock market sank nearly 15% in the highly volatile final three months of last year, while gold made a strong move upward (see chart below). How were you invested during this period?
S&P 500 and Gold, Q4 2018.
(Chart Courtesy of StockCharts.com)
Whatever your reason for resisting portfolio change, Augusta Precious Metals is here to help. Information is what you need to gain confidence in taking action. Augusta is proud to make available the most knowledgeable and helpful professionals in the gold and silver industry.
Learning more about precious metals investing and how to protect your savings against investment risks is easy when you call 855-242-4121 and speak with a member of our team. And if you do ultimately decide a gold investment (or silver) is the right move for you, the same team will be there to make certain the process goes smoothly. Don’t let something as simple as inaction destroy your portfolio – and your future. Call Augusta today.