With the markets hitting an all-time high the other week soaring over 21,000, many people have been asking this question, “when is the bottom going to fall out of the market?” While nobody has a crystal ball, it might be time to start thinking about where to put your money if you are concerned that the markets are going to unravel in the 2nd half of 2017. Here are four investments to consider during a stock market crash.
- Cash – Remember, return of principal can sometimes be better than return on principal especially while the markets are spiraling on a downward trend. Even though your average savings account is going to pay .20% to .40%, you could leave your money in an FDIC insured account and then slowly dollar cost average your way back into the overall market. You could also consider using Certificates of Deposit (CD’s) as an alternative cash idea if you don’t want to leave the money in a money market account or in a savings account.
- Hard Assets – Some of you may remember back in 2008 that when the markets were getting clobbered that people did well in assets classes such as silver and gold. While most people think about a hard asset being real estate, there are other assets that you can physically buy including gemstones like diamonds, collectibles (art, cars), and of course the precious metals area are all possibilities of arenas to consider during a stock market crash.
- Equity Indexed Annuities – Even though the word annuity often gets hits with a negative slant, you sure don’t hear of people complaining who are getting those monthly pension payments in retirement. These kinds of products are offered by many insurance companies, but Midland National® Life Insurance Company is a strong and established life insurance company that you could check out for looking at these types of annuities. You will give up some of your upside in the products by having a cap on the upside growth of a particular index (i.e.- the S&P 500 cap may be 10% in a particular year as an example), but you will not lose any money if the market goes down 5% or 50%. (note: this does depend on the actual equity index annuity product, so please review carefully)
- Land – Will Rogers had a famous saying about land, “They ain’t making anymore of it”. If you have the hold time, land can be an alternative opportunity when the stock market crashes. You should look for land in areas where property values may have gone down or the population inflow exceeds the population outflow. Land requires having patience because it is a long-term investment, but one that could be a place holder in a sustained downturn in the equity markets.
If you are struggling with how to handle these as you plan for retirement, give me a call or shoot me an e-mail at email@example.com and we can help.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.