Would financial diversification work for you?

Posted on April 29, 2015

We’ve heard about the importance of diversification, but what does that really mean? Traditionally, people’s portfolios were allocated in some percentage between equities and bonds. As people grew older, the percentage that was allocated towards bonds increased as a percentage.

That worked for many people, but fortunately, what’s happened over the last few years, and will probably continue for the future is that equities tend to all react the same. The market goes up, all equities go up. The market goes down, all equities go down. This is very frustrating. It reinforces the importance of diversification. But the question still remains, what exactly can we do? What other areas should we consider investing our money?

One of the things people look at is real estate. For many people real estate was a viable option. Unfortunately the lesson learned in the economic collapse of 2005-2010 was that real estate does not always increase in value and in fact, when it decreases, it decreases at an alarming rate. What we know is diversification is important. The struggle we’re faced with is where else to allocate our money.

An option that historically has only been used by large financial savvy institutions is the role of previously-owned annuities. What exactly are previously-owned annuities? A good analogy is the New York Stock Exchange, a secondary market where you are buying stock from somebody else rather than directly from, let’s say, Apple Computer. In the case of a previously-owned or secondary market annuity, rather than buying a brand new annuity from a carrier like New York Life, you are buying New York Life annuity payouts from somebody that already owns them and you are buying at a discount or wholesale. The effect of that is instead of getting 2 or 3 percent  return, you are getting 4, 5, 6, or 7 percent, and you are still getting the payments from New York Life.

For individuals seeking to diversify their portfolios, who are worried about the risk that many other asset classes such as real estate possess, considering an investment in previously-owned annuities can be a smart financial move.  For learning more about whether this is appropriate for you, click here.

John Bulbrook, Bulbrook Drislane – IN-FORCE ™ Secondary Market, Finance and Investments, Secondary Market, Annuities, Fixed Term Annuities, Life Insurance, Structured Settlements, Previously Owned Annuities, Pre Owned Annuities, Immediate Annuities, Factored Structured, Settlement Secondary Market Annuity, Aftermarket annuity, Inforce fixed term annuities, Inforce fixed term annuity, Inforce annuity, Deferred Variable Annuity, Inherited Annuity, Equity Annuities, Straight Life Annuity, Non Qualified Annuity, Mutual Fund Settlement, 20 Year Annuity, 10 Year Annuity, 5 Year Annuity – Click here for his Facebook,TwitterLinkedInGoogle Plus


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