Alternative options in volatile markets
We recently met with a client that was risk averse, but still wanted to get some market participation. It's been a rough market this year, with the S&P 500 down about 25% at times. Bonds have also done poorly due to multiple interest rate hikes by the Fed. It can seem like there's nowhere to position a portfolio without the potential to lose money; and although the bond market and stock market seem to be recovering now - this client didn't want to take any chances. Thankfully, thanks to some creative investment ideas we used for this client we found some suitable recommendations. Since interest rates have increased at an unusually rapid rate this year, bank CD rates have as well. We were able to structure a portion of the client's portfolio into 1,2, and 3 year laddered CD's earning 4,4.5 and 5% FDIC insured interest rates. In addition to the CD's, we used Buffered ETF's whose performance were tied to the S&P 500 to offer more potential upside should the markets recover. One of the buffered ETF's provided a 10% downside buffer and the other one came with a 25% downside buffer. Both buffered ETF's offered market participation and on the upside up to a certain cap for 12 months.
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This case study is provided for illustrative purposes only to provide an example of the firm's process and methodology. The results portrayed in this case study are not representative of all client situations or experiences. An individual's experience may vary based on his or her individual circumstances and there can be no assurance that the firm will be able to achieve similar results in comparable situations. No portion of this case study is to be interpreted as a testimonial or endorsement of the firm's investment advisory services. Additionally, it is not known whether the clients of these case studies are based upon the approval of the firm or it's services. The information contained herein should not be construed as personalized investment advice. Please contact us for additional information.