KarenSchwenk
www.ksadvisory.com kschwenk@ lincolninvestment.com 415-652-7188
Q22019
By Karen Schwenk I'd like to share a few of the most common questions I receive from you all. Hope it sheds light and awareness. Q: I am wondering how my asset will survive this pending recession I keep hearing about - what is the best way to have my portfolio be "bullet-proof"? There are many schools of thought on this - but I am going to focus just on two strategies I put into play for your portfolio's financial well-being. Buy t he Dip. Ever heard of this adage? It's an investment suggestion to buy a quality equity or fund when its share price drops in value. Why?Well, it's like buying your favorite designer clothing or technology on sale. Who doesn't like that idea? Knowing whether the investment position is one of quality and stability is my job, but if you own it, I
still like it and value its place in your portfolio. When you see your portfolio start to lose value, send in more money, Buy the dip. Buy SWAN's. Another industry phrase that indicates equities or holdings that allow you to "Sleep Well At Night". Here's the thing: with me - you already own SWAN's. As many of you have heard when asking if I will buy Canadian cannabis companies or shares of Tesla, my unequivocal answer remains; "I don't buy shares of start upsor companies that are not yet making a profit." SWAN's have historically strong earnings records and wide economic moat's or - a competitive advantage or marketplace share that no one is currently challenging to take away. Q: What are the benefits and downfallsof paying off our house with a portion of
our retirement nest egg, now that we are retired and of age (59.5) to accessour IRA/401k/403b? Pros: 1) You will free up monthly income for other uses if you no longer have that payment, so that's a plus for many of you. 2) It is also possible (depending on the type of mortgage that you have) that you will save money over time in the form of interest paid to the bank for servicing your debt, so a long term savings may also be felt. 3) And lastly, paying off the mortgage can simply be an investment in your comfort. Cons: 1) You may end up house rich and cash poor. Without significant (6 months+) accessible un-invested savings, you may end up in an emergency situation and need cash to supplement some unforeseen need. 2) You may end up under-diversified. With a home now paid off, what percentage
of your total net worth is sitting in Real Estate? It may be a great investment, especially in the Bay Area, but you don't want to end up unable to sell your home or access extra cash during the next real estate correction. 3) Pulling a sizable chunk out of your IRA to pay off said mortgage means you are increasing your taxable income for the year by whatever you withdraw and perhaps paying higher taxes on that distribution. Always consult with a CPA prior to making a move like this to see exactly how you would be affected. Evenly distributed asset allocation in your total portfolio is how we typically succeed over time, investing in quality and putting the time in is often what creates success in profitability. Contact me for a review anytime.
Theviewsand opinionsexpressed herearethoseof Karen Schwenk and may or may not represent theviewsof Capital Analysts or Lincoln Investment, Registered Investment Advisers. Securitiesoffered through Lincoln Investment, Broker Dealer, Member FINRA/ SIPC. www.lincolninvestment.com. KSAdvisory and theabovefirmsareindependent and non-affiliated. Past performanceisnot indicativeof futureresults.