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Our working years
are also considered our saving years. And typically growth oriented investments
are used to support the need to accumulate (save) for the non-working years.
Expressed another way this means, we are willing to absorb
risk of principal over the long term eventhough price volatility is considered normal behavior for growth investments.
Although the historical long-term trend will usually overcome short-term
declines, recovering from a loss or a series of losses usually takes longer
than anticipated, here’s why….
Lets say you own a growth stock or growth stock fund valued at $25.00 per share. The market
corrects (as it normally does) and the value drops to $18.75 per share, a 25% decline. But, if you were to experience
a 25% gain at that point you would only get back to $23.43 per share. You would need to receive a 33.33% gain to get back
to where you were originally.
Once
again,
since
price volatility is considered
normal behavior for growth positions it would put the original dollars invested at continued risk by extending the
recovery period with each decline. Obviously this compounds the problem.
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Our Approach...
is to minimize this risk exposure by lessening its impact on your original principle. How do we do this, by positioning
the dollars available into high quality dividend or interest paying stock, bonds or mutual funds.
We then allow the recurring income from these preservation
oriented investments to accrue, creating a secondary cash reserve. As this reserve builds we use these market-related
earnings (dividends & interest) for future reinvestment and not the original principle. Please refer to our
portfolio builder program for more on this subject.
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Since this method
offers a recurring income stream you have the added flexibility
of redirecting distributions to other financial priorities instead of reinvestment… thus, reducing any drain on employer-related
earnings when necessary.
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securities offered through
Quest
Capital Strategies Incorporated
23832 Rockfield Boulevard,
Suite 130, Lake Forest, CA 92630
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