STOCK AND MUTUAL FUNDS:
This is not to say that stocks or mutual funds are not good investments. Depending on your investment objectives they may be a good alternative for you. If you are in for the long haul, stocks have historically performed very well. If your retirement window is 20 or 30 years down the road, stocks may still be your best long term option. However, there have been periods, sometime lasting decades, when they have under performed. From the early 1930s to1950 stocks in general suffered net losses, and from the mid 1970s to the early 1980s stocks also under performed. Right now the stock markets are very volatile with the NASDQ stock index at just 45% of where it was five years ago. Dividend yields are at an all time low with returns of one or two percent, if that. In a recent Wall Street Journal article Warren Buffett, of Berkshire Hathaway fame, warned investors they "need to recognize that it may often take an extended period (of time) for the value of even an outstanding company to catch up with the price paid. Whether this is true or not only time will tell.
The point is that while stocks can be an important part of your investment strategy they can also have some serious down side risks. Especially, if you need to count on your money for retirement, a child's college education or any other emergency. If you get caught in a stock slump that money may not be there when you need it. Since 2000 IBM has lost half its value and has not yet fully recovered. If you had needed to cash in IBM stock anywhere along the way you would have suffered a substantial loss. After the internet bubble of 2001 this is a story that has been repeated countless times - its not exactly the stuff retirements are built on.
Mutual Funds are really no better. While they can help mitigate the risk of owning individual stocks, their share prices can fluctuate wildly A case in point, from 2000 to 2003 the S&P 500 lost more than half its value and only recovered in 2007. To make matters worse, the average mutual fund charges a management fee of 1.5% each and every year whether you make money or not. They can also add additional sales and transaction fees that can increase the actual annual charge to 2 or more percent before earnings. Not much help here either.
CERTIFICATES OF DEPOSIT AND SAVINGS ACCOUNTS:
Certificates of Deposit, on the other hand, are clearly better at protecting your principal but, due to FDIC regulation, only pay minimal interest and generally carry substantial early withdrawal penalties. So, if you need to cash out early you could suffer a significant loss of interest. Only banks make money on CDs and Money Markets. Savings Accounts are now actually a slightly better option. While generally earning less interest, they do not have withdrawal penalties.
PRIME CERTIFICATES OF PARTICIPATION – COMBINING HIGH YIELD INCOME WITH PRINCIPAL PRESERVATION
If Stocks, Mutual Funds, Certificates of Deposit and Savings Accounts are not the answer what is?
Through our extensive years as trust fund administrators we have developed a solution. One that combines high yields with principal preservation. We have combined the best of both equities, bonds and certificates of deposit and designed an innovative investment strategy that provides higher returns, safety and liquidity.
For the past seventy years the trend line has been for bigger government with more regulation and control over what we can do and how we can do it. In the name of protecting small investors, the FDIC and the SEC, have made investments that are high yield and principal protected difficult to find. High yield returns are essentially restricted to high wealth individuals who can meet "Qualified Investors" status for either private placements or venture capital partnerships. This not only restricts individual investment options, it limits investment in the very businesses that drive the American economy.
With Prime Certificates of Participation, we believe we have a better solution.
To purchase a Prime Certificate of Participation just register your offer with Sherbourne Financial by clicking here.
For more information on how you can profit from Prime Certificates of Participation click here.
To Contact us click here.
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