How Does a ‘Tail Hedge’ Protect You During an Uncertain Market?
Retirement Talk Podcast with Laura Stover
English - March 11, 2022 11:30 - 33 minutes - 46.5 MB - ★★★★ - 38 ratingsInvesting Business 401k financial money ohio retirement business investtalk laura lifestyle moneymanagement Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
‘Heads I win, tails you lose.’ In this uncertain time, investors are facing a lot of volatility. We often discuss using tactical management and algorithms to prevent losses but what other tools are available? How can we win when the market goes up and when the market goes down? We can always be certain the market will do one of three things: go up, go down, or go sideways. So we have to prepare and properly protect ourselves for all three outcomes. On today's episode, we'll discuss the value of a tail hedge, managing tail risk, using a tail hedge versus an algorithm, and how this insurance tool fits into your overall portfolio construction.
Facing a black swan event and managing loss becomes much more significant as you reach retirement. In the same way, we protect our home, our car, and our health with insurance we should also be protecting our portfolio. By managing your tail risk, you are able to utilize insurance within your portfolio. This allows you to stay competitive when the market goes up and you will continue to make gains when the market inevitably goes down or sideways.
With a tail hedge, if you experience a 20% loss, your returns are made while the market is going down rather than when it is coming back up. A tail hedge can allow for a 75 to 25 allocation that outperforms the cost of the insurance, mathematically it's a sound decision to implement within your investment strategy. Putting together a diversified and properly allocated plan with budgeting, cash flow, inflation, and protection all taken into account is more essential than ever.
Get a free copy of our “How to Survive a Bear Market Guide”: [email protected]
Strategy consultation: https://redefiningwealth.info/schedule/
Review the article mentioned in today’s show >>
Today’s episode and show notes can also be accessed by visiting:
https://redefiningwealth.info/95-how-does-a-tail-hedge-protect-you-during-an-uncertain-market/
Rate & Review and Subscribe to the Podcast:
https://podcasts.apple.com/us/podcast/retirement-talk-podcast-with-laura-stover/id571347188
Links
Schedule a Review: https://redefiningwealth.info/schedule/