BAF Insurance Company Rebalancing your portfolio in 2012: Simple is good

After the last few tumultuous years, many financial advisors are steering their clients back to basics; straightforward, simple investment strategies that guarantee returns and build wealth.

For a while, investors tried to outsmart the market by constantly changing their portfolios in the name of diversification and in a bid to take advantage of as many gains as possible. Those who resisted that temptation and chose to keep it simple while rebalancing their portfolios once per year, suffered less losses overall.

Somewhere between the fears of double-dip recession in the United States and worries that the European economic crises will unleash unimaginable global horrors, savvy investors are steering clear of high-risk investments.

If we have learned nothing, we should have all learned this one lesson: investing on the basis of pure speculation or whims and fancies is not compatible with building true wealth over the long term.

Stocks, bonds and cash

The trend towards amateurs dabbling in the stock market which spiraled upwards a few years ago has reversed itself. It is now evident that for the average person with a job and a family, selecting your own stocks and balancing those investments is far more time consuming and arduous than the advertisements purported. In many cases, the next best stock to watch became the worst stock to invest in rather quickly.

On the other hand, although there were a few dips and dives in the bond market, the large-scale disaster predicted never materialized. In fact, the Barclays Capital Aggregate bond index, a widely accepted benchmark of investment-grade government and corporate bonds, gained almost 8% in 2011.

If you were among the many who listened to the prophets of doom and over reacted by dumping your bonds, you missed out on an opportunity for decent gains.

Another returning trend is for timid investors to play it safe by simply accumulating cash reserves in savings accounts. Having been burned in the past, many have forgotten that saving is not investing. With banks paying between 0.5 and 1.5% interest on savings while guaranteed annuities pay as much as 3%, there is little doubt that though you may end up with some savings, the word wealth cannot be associated with regular savings.

Building wealth

So how do you decide where or how to invest in today’s climate? How do you mix it up while keeping it simple to ensure the best returns? Better yet, how do you resist the temptation to make “quick money” now with risky investments or play it super safe with low interest accounts in lieu of building long-term wealth? And if you already have a portfolio that isn’t working for you, how do you rebalance it?

Insurance companies, investment firms and many banks have qualified financial advisors who will help you to make the decisions that are best for you and your situation. A wide range of investment options exists including life insurance plans that carry moderate to aggressive investment components and annuities that build wealth over the long term and guarantees future income.

They can help you move your funds into vehicles that will work for you.

Here are a few tips to help you decide on which company to choose and where to start:

  1. Do your homework. Research and compare investment firms and insurance companies and the options they offer before making your choice.
  2. Ask the hard questions. A good financial advisor, insurance agent or other purveyor of financial products should be able to explain the company’s products and services to your satisfaction.
  3. Remember you come first. Your portfolio must reflect what is best for you and your goals.
  4. Read the fine print. As with all financial and legal instruments, read the contract carefully before signing on the dotted line.

In the final analysis, investing in 2012 is very different from a few years ago. Less people are following headlines and riding the waves just because of a “tip” from a friend or speculation from a reporter. The savvy investors are trending towards moderate risks, long term instruments and guaranteed returns.

Michael E. Francis
Sales Manager
BAF Insurance Company
t: 1-345-949-5089
e: [email protected]



Michael E. Francis