American Business Brokers - June 2020

About to Retire?

Consider These Low-Risk, High-Return Investments

As you age, it’s wise to make some changes in order to stay healthy, like your diet or your workout routine. Likewise, your portfolio should be adjusted to reduce risk and protect your financial health. After a bad turn in the market, it can take up to a decade to make your money back. If you want to retire in the next five years, then can you really afford that risk? Reducing your risk doesn’t necessarily mean missing out on high-return investments, though. Here are some low-risk, high-return investments to consider adding to your portfolio as you approach retirement. Peer-to-Peer Lending Otherwise known as P2P lending, this investment takes place online. Borrowers are matched with investors for loans that benefit both parties — lending without the bank. Your risk and potential returns depend entirely on which loans you choose to invest in. The two most popular P2P lending platforms are Lending Club and Prosper, and you can start investing in either platform with as little as $25. Real Estate Investment Trusts When you invest in real estate investment trusts (REIT), you’re investing in mortgages or direct equity positions in various properties. When the

stock market is in decline, REITs are a good investment because they’re not corrected with stock exchanges. Plus, their yield is usually higher than the dividends investors get from stocks. Fixed Indexed Annuities When it comes to low-risk, high-return investments, fixed indexed annuities (FIA) are the most attractive option for retirees. In 2018, renowned economist professor Roger Ibbotson conducted research into the return history of inflation, U.S. Treasury bills, government bonds, FIAs, and stocks. Unsurprisingly, stocks offered the highest returns historically, but Ibbotson was surprised to find FIAs came in second, beating out bonds and conventional wisdom. Historically, these investments have produced great returns for individuals who are in retirement or who are about to retire. However, remember that everyone’s circumstances are different. Before making any changes to your portfolio, talk to your financial planner about your options.

Lessons From the Toilet Paper Shortage

WHAT IT TEACHES US ABOUT CONTROL

If most Americans can agree on one thing, it’s that they never want to visit their local convenience store needing to buy toilet paper, only to find that it’s out of stock. When the COVID-19 pandemic reached the United States, a mass panic ensued in many big-box stores around the country. People bought out entire supplies of toilet paper, leaving behind uncomfortably empty shelves. With the benefit of a bit of hindsight, we can now look back at that phenomenon with a clear head and ask the question: Why did Americans buy entire stores out of toilet paper? Unlike many other products that sold out, it served no direct purpose in combating the coronavirus. As it turns out, the toilet paper shortage was the result of a few key psychological factors. At the base of the panic was a desire to simply stay in control. When we’re not living through a crisis, it’s very easy to feel like we have a good lead on things. However, when natural disasters or pandemics sweep through town, we want to make sure we can take care of ourselves. So, we rush to the store and buy as much as we need to feel in control again. Toilet paper is a product that few of us can picture living without. In order to feel in control, a few people bought way more toilet paper than they needed. Then, our herd mentality kicked in, and all of us started wondering if we were going to need to stock up on toilet paper.

When we reminisce about those empty shelves, it’s worth considering the lessons we can learn from the run on toilet paper. How do you react to situations that appear out of your control? Do you find things that you can control and focus on those? Do you immediately start thinking the worst- case scenario is on its way? Do you ruminate on the problem, or do you buckle down and solve it? Many of you might think you do well reacting to situations that are out of your control. However, it might not hurt to do some introspection and take a lesson from the toilet paper shortage.

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