9 Investment Hazards For Rockwell Employees and Retirees

'For Rockwell employees, discipline during market turbulence is key - rather than trying to time the market, consistent portfolio rebalancing and long-term focus can mitigate risks and unlock future growth,' said the Retirement Group, a division of Wealth Enhancement Group.

The Retirement Group, a division of Wealth Enhancement Group, can help Rockwell employees adapt to volatile markets while maintaining a long-term investment strategy, said an advisor with the Retirement Group.

In this article we will discuss:

1. Key investment strategies for Rockwell employees & retirees.

2. Longevity & market risk management.

3. How to avoid common mistakes investors make.

In 2021, financial markets hit all-time highs as an expanding economy reflected. The climate was complicated by weather occurrences and political and geopolitical changes affecting investors. Experience has taught us that discipline and perseverance are needed to invest - even for Rockwell employees and retirees. Focusing on longer term investments may help when emotions are high. According to a new study in Journal of Financial Planning, longevity risk is among the top three biggest investment risks for retirees today. With more people living longer than ever before, the fear of running out of money in retirement is real.

It shows why you should consider reducing longevity risk by incorporating annuities into your retirement plan or increasing your withdrawal rate to account for a longer retirement period. While continual changes may be challenging to balance out, a steady course can protect you from turbulence and unpredictability. We've compiled a list of typical errors and guidelines to help you and other Rockwell workers and retirees overcome these hurdles. Generally speaking, the financial markets have done okay but nothing is permanent. The 1990s dot-com bubble and the 2000s Great Recession are lessons in how high markets will fall. In a turbulent market, Rockwell employees may still find ways to make more money.

Keep up with market trends by planning for market falls. Impulses to leave volatile markets can outweigh longer term goals. You may need to rebalance your investing portfolio instead of fleeing turbulent times. You can profit from opportunities to act on underpriced assets, limit risk and improve return potential by being flexible. Active portfolio management permits such investing decisions. But first create the investment strategy that will guide your actions. Retrenching and starting over can be difficult to catch up. We help Rockwell employees like you build sound, flexible investing strategies during market rallies or declines. Problem is, investors often guess wrong and miss the best market opportunities. By way of example, the S&P 500's annual compound rate was 11.9% from 1986 to 2005, despite Black Monday, the dot-com bubble, 9/11 and other events. Ten thousand dollars invested in 1986 would have been over ninety-four thousand dollars today (before investment fees and expenses). The average return on investment was only 3.9% over that period, so the same US$ 10,000 grew to just over US$ 21,000. WHY? One explanation is trying to time markets. People who invest on the high and withdraw on the low might miss opportunities because they lack patience.

The problem is that equity gains are often achieved relatively quickly. If you are not in the stock when it starts moving, you can miss the entire play. The conclusion? It's almost impossible to forecast the market peak and bottom precisely. Nobody can regularly do it. And we see many Rockwell employees and retirees trying and failing. Keeping on course may require little course corrections. This is an unmanaged index in which direct investment is not possible - the S&P 500. Past performance is not indicative of future performance. Not timing the market is another thing. An additional error is having an excessively risky portfolio. Risk means that your investment might perform differently than expected. During the bull market era of the late 1990s and early 2000s, capital ran into equities, often into speculative tech and internet companies. Some investors escaped the low-priced value stocks in search of bigger profits. When a bear market followed 9/11, the tech sector gave way but many value companies hung in there. To avoid missing out on the dot-com boom, excessively risked investors must have seen their portfolios battered. Portfolio risk is deceptive. An apparently broad portfolio of stocks, bonds and alternatives is only part of the solution to managing risk. You could lose your portfolio if you correlate these investments - that is if they move in similar ways. Your investments respond uniformly to market decreases - and you could lose your entire investment portfolio. The goal is to assume some risk consistent with your long-term goals.

Consider these while you analyze your portfolio:

Do you overreach for a single asset class, industry or region? How many alternative investments do you hold? Do you own several similar investments or is there too much overlap? How structured is your portfolio for your long-term objectives, investment horizon and risk tolerance? Playing the market cautiously and taking on too little risk may also harm your portfolio. Even though limiting risk seems like a prudent strategy, you might miss big market moves. During market volatility, many Rockwell employees turn to low-risk investments like U.S. Treasuries and cash. This absorption of risk can hurt long-term investments because a large number of fixed-rate investments can hurt a portfolio's profitability. Inflation is a problem for long-term investing and under-growth can leave you short in retirement.

Investors dipped billions of dollars out of stocks in both years - the most since 2004 - despite S&P 500 record highs in 2019 and 2020. Some investors may be acting more cautiously amid persistent global uncertainty and market fears. Try to limit portfolio losses and investors could be exposing themselves to inflation, high valuations and higher-than-expected volatility. Stocks are a bigger loss possibility than short-term, fixed-rate investments but also offer more potential profit. For many investors, that luxury is unattainable - depending only on investments that hold value during market volatility. Although inflation annually depletes cash reserves, most investors need at least some growth assets. We believe enough risk is appropriate for the financial portfolios of Rockwell employees and retirees. Ask an investment professional if you should take on more risk.

Consider the following inquiries:

How many growth-oriented investments do I own? Can I afford to take a loss now in return for a profit later on? Was it reasonable to count on Social Security or other income if my investments fell? What risk do I feel comfortable with in exchange for greater investment returns? So could I live off my investments without taking additional risk? Emotional decision making during market swings may undo the best laid financial plan. The 2008 mortgage crisis cost many investors their money. Fearing a crash in the markets, some investors sold at the bottom. Nonetheless, some investors remain too safe and keep their money on the sidelines despite the market rebound. Memories of the accident are ingrained. Those born 1965 to 1981 are more emotionally invested than Generation X investors.

Working with a professional still means some investors will make emotional choices. One survey found 57% of investors who engage with financial professionals still panic and sell during market declines. Affluence and fear may well affect our financial decisions. Fear can make us drop an investment strategy if we do not achieve our goal. Greed might lead us to chase investment trends and take excessive risk. You can help your long-term investment goals by avoiding such emotional decisions. As investment representatives for Rockwell, we can be the voice of reason when emotions get real. All of our Rockwell clients need to believe us during these difficult times. Remember that we can answer your questions, give you confidence and show you the possibility that unpredictable markets can present. Many Rockwell employees make grave mistakes going after results. The historical performance of an investment is no way to predict future winners. Portfolios of many Rockwell employees suffered when popular growth stocks in the 1990s unexpectedly lost value.

One thing is certain:

If a particular asset class consistently outperforms for three or four years, you can bet that it will. You should have invested 3 or 4 years ago. Before the average investor decides to invest, seasoned investors usually have rebalanced their portfolios. Meanwhile, uncomplicated capital pours into the venture well after its peak. Make this mistake! Chase profits instead; Reinvest in strategies that have solid fundamentals; These are some of the situations where you would not make a Roth ROI: Warren Buffett once said diversification is a 'protection against ignorance' - no one can know everything about an investment or predict the future.

The first part of a diversification plan would be to hold a portfolio of stocks, bonds and cash. Others, like real estate, may be included that match your investment objective/profile. By avoiding a single asset type entirely, you can diversify. During a market surge or downturn, your portfolio dynamics could be skewed too heavily in one sector. A second component to any well diversified portfolio is asset class diversification. A stock holding too much of one company's stock can spell disaster - and it is a fatal error that many Rockwell employees make when they invest. Imagine losing your job at Rockwell and having stock in your name again; You might all lose your retirement savings at once. Some specialists favor a 10% cap. For protection against this risk, buy a broad basket of small-cap/large-cap, international and sector-diverse stocks. A market downturn may damage one firm or sector but a gain in another could make up the loss. But diversification together with asset reallocation will not prevent a loss. No way can be said that a diversified portfolio will improve total returns or perform better than a non-diversified portfolio.

Not all investors are suitable for alternative investments and these may form part of the portfolio's risk capital allocation. Management practices applied to alternative investments may accelerate the rate of possible losses. Small-cap investment may be associated with higher market volatility and potential return risk than larger, more established organizations. Investing internationally involves dangers not found in investing in the United States. They include currency swings, political risks, accounting - procedure differences and the lower public disclosure threshold for non-U.S. companies. A 5% return may seem better than a 3% return on first sight. The situation is different, however, when the 5% return was from taxable stock dividends and the 3% was from tax-free municipal bonds. A US$ 10,000 investment may be worth US$ 17,908 after 10 years at a hypothetical 6% yearly return. But after hypothetical state and federal taxes of 5% and 25% you would only have US$ 11,228 left. This tax cuts your annual return to 1.2%. Tax evasion never pays * This example is for illustration only. It is not intended to reflect past or future investment performance of any investment. Your own investment performance might be greater than or equal to this example.

Tax implications should be considered whenever you:

Buy or sell assets Create a financial plan. Define your estate & charitable goals. Give presents You may remember that the federal government taxes dividends, interest, rent on real estate and capital gains. Hence, structuring your investments properly will help you minimize your tax liability. One strategy is to invest part of the portfolio in assets that pay taxes - municipal bonds for example. This might work for some, but it shows how forward-looking strategies can help you arrange your portfolio carefully. Talk to your investment representative and tax professionals about tax issues. They can help you determine what solutions are optimal. Taxes aside, successful investing strategies consider the investor's investment objective, risk tolerance and time horizon. Municipal bonds are subject to price and availability variations. They are subject to interest rate and market risk if sold before maturity. Bonds will lose value as interest rates rise.

The alternative minimum tax might apply to interest income. The sources for municipal bonds are the Peter G. Peterson Foundation and the Tax Policy Center as of 2019. The effective federal tax rate is divided by total federal taxes paid per cash income. Not knowing one's own errors may lead to negative investment results.

Among studies of people's perceptions that they do better than the average person at a given task, about 90% of respondents say that they do. In reality, most people are not above average, so many are not self-aware. And that logic holds true for those who invest on their own. Thus having someone else help you make rational financial decisions may help you overcome your own irrational ideas. Actually, 40% do not even know how to plan for retirement despite 74% saying they need more retirement preparation. But sometimes professional counsel is available. Working together with a financial representative increases confidence that one can retire comfortably.

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A good long-term investment strategy involves positioning and rebalancing a portfolio to weather bear and bull markets. This much complication may make dealing with an investment representative necessary to meet your goals. Individually seeking returns and using cookie-cutter strategies is dangerous. We believe training, cautious management and a long term active investment strategy are necessary to navigate today's turbulent investing environment. If investors recognize and avoid these nine typical mistakes they might benefit in achieving their investment goals. A long-term investment approach demands a customized strategy based on your present and future needs, investing horizon and risk appetite. These criteria help ensure that whatever the short-term market performance, your assets will be positioned to achieve your long-term objectives. Investors may compare investment hazards to climbing a mountain. As climbers assess and manage hazards like avalanches, rock falls and weather changes, so investors must assess and manage risks like market volatility, inflation and economic downturns.

 Unprepared climbers and those without proper gear might get hurt or die, and investors who are not diversified or who do not research their investments may lose money. Both climbing and investing require planning, attention to detail and a willingness to change with the times to reach the top or meet long-term financial goals. Keep to your strategies and do not let your emotions take over during the journey. No one can predict where markets will go, but generally speaking, every disadvantage has some upside somewhere else. Your financial dreams may become reality with dedication and concentration. Ultimately, investment professionals can help you achieve your goals while you sit back and enjoy life. Contact us with questions about the material in this report or for more information about our services and experience.

 Meeting with you is always free and we would like to help you with your financial goals. A nationwide Group of financial advisors known as The Retirement Group. We only plan for and design retirement portfolios for transitioning corporate employees. And each representative of The Group has been hand picked by the Retirement Group in select cities throughout The United States. Advisors were selected based on pension expertise, financial planning experience and portfolio construction knowledge. A conservative investment philosophy guides the Team in constructing client portfolios with laddered bonds / CDs / mutual funds / ETFs / Annuities / Stocks and other investments. They handle Retirement / Pensions / Tax / Asset Allocation / Estate / Elder Care issues. This document uses different research tools and techniques.

 All attempts to estimate future results involve assumptions and judgments and are therefore only tentative estimates. The law, investment climate, interest rates and personal circumstances will all change and will affect how accurate our estimations are and how appropriate our recommendations are. This shows the need for ongoing change sensitivity and for periodic plan re-examination and modification. Nothing contained herein shall be construed as an attempt by the Retirement Group, LLC or any of its employees to practice law or accounting. We look forward to speaking with any tax and/or legal professionals you may select regarding the implications of our recommendations. Through your retirement years we will continue to update you on issues affecting your retirement via our complimentary and proprietary newsletters, workshops & periodic updates. Or call us at (800) 900-5867.

 Sources:

  1. Kiplinger Staff.  'How to Manage Longevity Risk in Retirement.'  Kiplinger , Dec. 2024, pp. 1-3.

  2. Western & Southern Financial Group.  'How Market Volatility Impacts Your Retirement Savings Plan.'  Western & Southern , Feb. 2025, pp. 1-4.

  3. Thrivent Financial.  'Longevity Risk: What It Is & How to Prepare for It in Retirement.'  Thrivent , Sept. 2023, pp. 1-3.

  4. Hunt, Daniel.  'Protecting Your Retirement From Market Volatility.'  Morgan Stanley , Nov. 2024, pp. 1-5.

  5. Charles Schwab.  'Longevity Risk: Could You Outlive Your Savings?'  Charles Schwab , Aug. 2023, pp. 1-3.