Posted by The insurance industry around the world is built around the need to protect assets.Think of our cars, homes, yachts, and even personal belongings, which we've become accustomed to as assets that need to be protected.
Therefore, for theseConsumerFor car insurance, home insurance, yacht insurance, we will not hesitate to purchase corresponding insurance products to protect the value of these assets in the event of a disaster.
So the question is, shouldn't our cash, our investment portfolio, also be treated as an asset that needs to be protected?
Why Asset Protection?
A household's portfolio usually consists of individual stocks, ETFs, and bonds.We hold this portfolio of assets for a long time because we believe that our wealth will accumulate accordingly over time.
The reason why we do this is because the media around us, friends, all say so, which is also usually considered to be "common sense".but from the data*On the other hand, since 1928, the S&P 500 has lost more than 500% 42 times in a row, with 10 of those losses more than 20%.
The most recent example is the 56.8% crash that started in 2007 and bottomed in 2009.The decline, which begins in 2022, once again exceeds 20%.
If we know of these "catastrophic" market events, we will certainly react in advance to insure.
But the vast majority of people always hope that the rally will outperform the broader market in an up cycle, ignoring Buffett's repeated emphasis that "never lose money"Basic principles, and a long-term stable and profitable compounding growth strategy.
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New protection mechanism with significantly increased risk
Taking into account the Sino-US trade war, Brexit, geopolitical risks in Russia, and the recent resignation of British politicians, the attack on the former top choice in Japan, and the risk of an economic hard landing brought about by the Fed's interest rate hikes, we will conduct an assessment on assets. The time to protect is now.
Traditionally we know that insurance companies will provide asset protection strategies for the S&P 500 (S&P 500), Dow Jones Industrial Index and Nasdaq 100 Index, guarantee the funds in the policy account, and give 0% in a plummeting market environment The underpinning income protection of , which is shown in the figure aboveFLOOR strategy.
In addition, some insurance groups with "asset management" as their core business provide more low-volatility quantitative strategies and unique asset protection patent mechanisms.
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New option: rule out the possibility of a "zero" return on an asset
But with "asset Management"The well-known top insurance company not only provides a 0% FLOOR minimum guarantee for the assets in the policy account, but also provides the enhanced function of "index income lock", which may help policyholders in the volatile market environment, By actively controlling the policy account, it locks in the gains in the short-term rebound of the market, thereby eliminating the possibility of "zero" asset returns.
(©️Allianz Insurance Index Yield Locked Public Consumer M-7391 Manual)
This type of asset protection insurance brand that can achieve active management has correspondingly stricter screening and access mechanisms for investors and policyholders’ families.Global High Net Worth Families.
Think about how we buy and sell a house
If 10 years ago, you bought a house for $350,000 and sold it now for $400,000, then we would tell friends and family that I sold a house and made $50,000 for a net gain of 14.2%.
And what is the actual situation?Perhaps in the past 10 years, the accumulated home insurance we paid may be far more than 1 yuan.After deducting the cost of home insurance, our actual gain was $40,000, a net gain of around 11%.
In theory, we can cut our costs by not buying home insurance, right?But in reality it's almost impossible to see anyone doing this.
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Article summary
Finding the right insurance for our family's funds and portfolio wasn't difficult, all the resources and products were there all the time.
However, for most families engaged in investment and financial management, it is a bit counterintuitive for us to give up the growth potential of our investment portfolio, and we have always been confident that we can outperform the market.
But we will only revisit this issue when catastrophic asset price crash after catastrophic asset price crash after another has come, when our stock and asset accounts have shrunk dramatically.We may not take action until we reach a new stage in our life experience and accumulation of wealth.
Then, how many 10 years are there in our lifetime? (End of full text)
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Appendix* “Stock Market Briefing: S&P 500 Bull & Bear Market Tables,” Yardeni Research, Inc. 2022, https://www.yardeni.com/pub/sp500corrbeartables.pdf
