Our Investment Strategy

Over the next few years...  The market may be the absolute best place to invest or the absolute worst. The fact is we cannot predict what the future will bring.

Risk Management - The Traditional Approach

Stock market risk is conventionally dealt with by retention, with an attempt to minimize and control it through diversification, asset allocation and having a long-term time horizon. The problems associated with this means of risk management are well documented and give investors a false sense of security, especially when overall markets are unchanged or increasing as they were in the 1990’s.

Asset allocation, diversifying investment funds between stocks, bonds, cash and other areas (such as real estate), helps to reduce risk but does not protect the investor from dramatic downturns in the market.

Risk Management - Our Approach

The primary objective of an intelligent investment strategy should be to preserve capital and build on it at a consistent, moderate rate in both bull and bear markets.

Transferring Risk

We buy a homeowners policy to transfer the risk of loss by fire to an insurance company.

We buy a market-linked investment to transfer the risk of loss in the market to the issuer.

The majority of people who have money to invest put a substantial portion into the stock market. The minority chooses to deal with stock market risk by complete avoidance. But there is an opportunity cost in missing out on the sometimes-exceptional gains that investing in the market can provide. The answer to this dilemma is to transfer the risk of being in the market to a third party.

When you transfer the risk of loss of your house to a third party you pay a premium, even though you hope you never have to submit a claim. When you transfer the risk of loss in the market to a third party you continue to hope that the market goes up in the long run even though you may not receive 100% of the increase. The fact that you may not get a return as high as the overall market is the “premium” you pay for the guarantee on the principal of your investment.

Tools of Risk Management

There are a variety of tools that can be utilized to design an investment strategy that creates protection from the risk of investing in the market, while allowing for potential growth that is tied to market performance.

The primary tools we utilize are Equity Index Linked investments. These allow investors to benefit from the potential growth of the stock market with no risk to their underlying principal.

Each person who has saved and accumulated wealth and invested has had to choose between two options:

1. Give up a degree of safety in return for greater opportunity for growth, or;

2. Sacrifice growth opportunity in return for a higher degree of safety.

Equity Index investments provide a third option to consider, one that offers the power of money in the market with the comfort of money in the bank.

Equity Linked Index Annuities

These tax-deferred contracts are written and guaranteed by insurance companies. There are many different terms and variations available and some offer the flexibility of allocating among several major indexes. The more attractive contracts offer annual compounding, no ceiling on the amount of gains as well as an annual reset provision. The reset provision allows the index credit to be added and "locked in" on each anniversary. It can never be taken away, regardless of future index performance.

Equity Linked Life Insurance

These contracts provide an appealing alternative to traditional life insurance policies that accumulate cash value. The more attractive policies offer a minimum guaranteed annual rate (such as 3%) as well as offering the potential to earn a percentage of the performance of a major stock market index such as the S&P 500. Most policies provide an annual reset feature. Cash value life insurance is purchased for long-term goals including retirement and estate creation.

Conclusion

Our strategy is primarily focused on preserving capital and building on it at a consistent, moderate rate in both bull and bear markets. To achieve this objective, we primarily use market-linked investments. These investments are particularly suited for investors who have an investment objective of principal protection with long-term growth potential. Regardless of your risk profile, every investor should have some part of their portfolio in safe investments.

Progressive Financial Planners^TM – your source for principal protected investments.

As with all investments, these products involve certain risks and may not be suitable for every investor. See a prospectus for a description of each offering, including risk factors. Progressive Financial Planners, LLC does not give legal or tax advice. Please speak to your legal or tax professional for such guidance. This document is neither an offer to sell nor the solicitation of an offer to purchase any security.