FOMO. The fear of missing out. The compulsion to keep up with the Joneses can reach every corner of our lives: purchases, lifestyle, and even investing. Have you ever felt it? Social media has brought this phenomenon to the forefront in recent years, but most people haven’t given much thought to how Fear of Missing Out could be driving their investment behavior.
People like to think that they make their financial decisions based solely on logic …but that may not be the case.
Two researchers from Stanford say when it comes to investing, what we fear most is not the risk of losing our money, but the risk that we might not do as well as our peers. This could mean taking on more risk than is pertinent in the hopes of big pay offs, or leaving too much money on the proverbial table when market euphoria hits. All because we’re afraid of missing out on the next big opportunity.
This strange phenomenon explains why and how bubbles in the stock market appear. Investors pile into certain “hot” sectors or stocks, and prices inflate to unsustainable levels.
So why do investors follow the same patterns over and over again? Strangely enough, a herd mentality emerges that allows investors to feel a sense of false security – the idea that everyone is doing it, so it must be a good idea – and shared loss. When everyone loses money together, it’s not as painful as being the only one to lose (or the only one to “miss out”). The shared loss makes it easier to shrug off losing money, which sets investors up to repeat their previous mistakes.
There is good news though. You can avoid FOMO on great monetary gains while still managing risk appropriately. One way to accomplish this is by moving a portion of your portfolio to a fixed index annuity.
A Fixed Index Annuity offers the potential to grow your money along with stock market indexes, and comes with a guarantee that your money is 100% protected from stock market losses.
If you’re looking for a way to secure savings for your retirement, you may want to consider re-allocating some your assets from risky positions to a fixed index annuity.
Are you in need of a financial FOMO intervention? Contact Dewitt & Dunn today to schedule a complimentary appointment with one of our experts.
With 2017 winding down to a close, it’s time to consider what we can do now to prepare ourselves to make the most of our tax return. You may not realize, but there are also a few matters to consider for your 2018 return in light of the tax changes passed this December.
One of the easiest and most generous ways to add to your final return are charitable contributions. There have been so many catastrophes throughout 2017 that it is, sadly, very easy to choose one or two that you feel would benefit from your contribution. You will need to make these donations in cash or physical property.
If you are able, try to make any loan payments for the month of January before the end of December. This allows you to deduct the interest for this year rather than the next. The types of loans that are eligible for this benefit include mortgage interest for both first and second (home equity) mortgages, mortgage interest for investment properties, student loan interest, and the interest on some business loans, including business credit cards.
Salary Raises and Bonuses
Getting a bonus or pay increase this month? Ask your employer if you can defer it to January. With the new tax bill, the return on taxable income will be higher in 2018 vs. 2017. Make the most of that extra income by waiting just a few more days.
Increase Your 401K Contributions
With the impending higher tax rate on its way, plan to save for your retirement by increasing your 401K Contribution. Less income will be taken from your weekly or bi-weekly pay check so why not use that extra cushion to bump up your retirement savings plan. Saving now will only be beneficial later.
Interested in learning more about how to save for your retirement? Contact Dewitt & Dunn today to schedule a complimentary appointment with one of our experts.
What Does an Insurance Company Rating Really Mean?
Before making a significant investment, we recommend researching the insurance companies you’re considering. One method of comparing insurance companies is to look into their financial strength ratings.
An insurance company’s financial strength rating refers to that particular company’s ability to pay policyholders’ claims.
Football season has arrived again and millions of fans are building their fantasy teams, talking strategy and arguing about which teams are in the best position to make it to the Super Bowl.
Football debates can go on for hours, so let’s take a quick time-out to focus on what America’s pastime can teach us about winning “The Retirement Game”.
Just like in football, financial penalties can seem like they are coming out of nowhere (“What are game are you watching, ref??”), but a little bit of careful planning and awareness can keep you from being sidelined by unexpected expenses and life events.
Retirement is a goal for virtually every American worker. For many, however, retirement savings aren’t on the radar; instead, Social Security is the safety net millions of aging employees plan to utilize to stay afloat in the years to come.
While it’s not recommended to rely solely on Social Security in retirement, this is a reality many Americans face. According to the Social Security Administration, 21% of married couples and 43% of unmarried individuals depend on government benefits for 90% or more of their income in retirement.
As you explore your retirement options, you’ll likely encounter more than a few investment strategies.
Whether you’re close to retirement age or years away from it, making smart decisions at the onset is critical to reaping the most reward when that time comes.
Yet, with so many choices and so much jargon surrounding the industry, it can be difficult to determine exactly which path is the best one for you. From different types of annuities to IRAs and 401(k)s, there’s no shortage of places to put your money — if you can discern which place is best.
That might be why, according to a new survey, Americans revealed they’re less confident about their retirement earnings today than they were just one year ago.
One way to boost that assurance? Learn as much as you can about the choices you’re presented.
A question we hear quite often is, “What is a fixed index annuity?” It’s a very valid question because fixed index annuities are unique among the various types of annuities and are a little hard to understand. So to answer the question, we’ll throw in a little history, give you the formal definition, elaborate on how to use them to build your retirement savings, and explain how they offer guaranteed income for life. Let’s get started.
Annuities have been around for a long, long time, dating at least back to the Roman Empire. Around A.D. 225, Romans used an “annua” to pay their soldiers. Annua were lifetime stipends paid once per year instead of paying soldiers a lump-sum at the time of their retirement. “Annua” is a Latin word which means “annual payments.”
The fixed index annuity, however, is a much more recent invention. Read More
If you are cringing every time you open your bills every single month, well, you’re definitely not alone. According to a new report from the Federal Reserve Bank of New York, Americans’ debt level has hit a new record high. Total U.S. household debt has hit nearly $13 trillion in the most recent quarter. That is up over $500 billion over the same time last year. Well, that study also found that the average American is about $37,000 in debt. So 1 in 10 Americans are more than $100,000 in debt, and that’s not even including your mortgage. Credit card debt is also at a record high. According to the Federal Reserve, U.S. households collectedly have more than $1 trillion in credit card debt. Read More