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David P. McCabe,
WMCP®, ChFC®, CLU®
Financial Planner
Nathaniel D. High, RICP®
Financial Planner
Nicholas J. Over, CFP®
Financial Planner
Sara E. Martin
Client Relations Manager
Jennifer A. McCabe
Client Relations Specialist
jennifer.mccabe@prudential.com
Centuria Financial Group
2333 Baltimore Blvd Suite B
Finksburg, MD 21048
Phone: 443-952-7232
March/April 2023
Investing During Complex Times
While creating a successful investment strategy may be challenging when markets decline sharply, it becomes even more difficult when the economy sputters along with it. This was the environment high-net-worth (HNW) investors faced last year as markets declined while inflation soared.
In this environment, how do you invest in a way that offers a decent potential return to battle the eroding effects of inflation while protecting your investments? While the alternatives may not make up for the record-high annual inflation rate recorded in 20221 —the highest in four decades—there are ways to protect your investments and seek a return.
Low Hanging Fruit
You know this already, but a reminder never hurts: Reduce your high-interest debt. If you wonder what this advice is doing in an investing article, weigh how much you pay on any revolving credit card or line of credit loan versus what some investments are earning.A 7% best-customer rate on your favorite credit card may be low, but doesn’t make sense when markets are down. Get rid of your revolving credit balances—especially today as even best-customer interest rates rise. Then consider investing your savings elsewhere.
Reap Generous Tax Credits
Electric vehicles and energy-efficient home installations, including solar panels, come with generous tax credits provided you meet certain requirements, which differ depending on time of purchase. Other restrictions apply.2 This may be a good place to put the money you save by not carrying high interest debt. Your tax professional can provide information unique to you.Think Long Term
Now consider where you might invest during volatile times. Look ahead and strategize with your financial professional. If an investment still has the favorable long-term outlook it had when you bought it, consider standing pat.And consider this: An emergency fund that covers as much as two years’ worth of financial responsibilities would make it much easier to withstand short-term volatility.
Fixed Income Looking Up
Now that interest rates have increased, the yields on fixed income investments are climbing, too.Look for Contrarians
When stock indices fall, some outliers including food and healthcare stocks typically do relatively well because you need their products and services regardless of economic conditions.Don’t Ignore Dividends
When everything else is equal, a dividend-paying stock or mutual fund* may offer a better total return than one without a dividend. Invest in this type of security because it makes sense, not solely because of the dividend. The dividend should be icing on the cake.Consider the Alternatives
Alternative investments encompassing diverse assets can be a potential hedge against inflation. They include everything from real estate (in both private and publicly traded forms) and private equity (versus publicly traded) to art, wine and even baseball cards. Recently, a 1952 baseball card featuring legend Mickey Mantle sold for $12.6 million.3 That’s some hedge!CONSUMER PRICES INCREASED 9.1% IN THE 12 MONTHS ENDED JUNE 2022 -
THE LARGEST INCREASE IN 41 YEARS
THE LARGEST INCREASE IN 41 YEARS
Look for Value
When you invest for the long-term, you get to buy good stocks when they are undervalued. Ask your advisor to keep on the lookout.Work with the Pros
In future issues, we will address these and other topics in more detail. But don’t forget to tap your financial, tax and legal professionals to create a financial plan that is specific to your situation.*Investors should carefully consider the investment objectives, risks, charges, and expenses of the fund before investing. Read the prospectus carefully before sending money. Because mutual fund values fluctuate, redeemed shares may be worth more or less than their original value. Past performance won’t guarantee future results. An investment in mutual funds may result in the loss of principal.
1 bls.gov, July 2022
2 cnbc.com, September 2022
3 apnews.com, August 2022
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Centuria Financial Group is not affiliated with Prudential Financial. Centuria Financial Group sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Centuria Financial Group is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Centuria Financial Group and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Sara E. Martin and Jennifer McCabe are employed by David McCabe and not The Prudential Insurance Company of America or its subsidiaries.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
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