Financial Tip of the Week with Steve Sexton: Understanding Your Risk Control Level

Financial Tip of the Week with Steve Sexton: Understanding Your Risk Control Level

This week, the San Diego Entertainer’s own financial expert Steve Sexton teaches on the “Three Worlds of Investing”. Enjoy this video clip as Steve Sexton shares useful advice regarding your investments.

“The Three Worlds of Investing” are:

Safety World

Includes certificate of deposits, government bonds, fixed annuities and more.

Principal, interest and term are guaranteed, however, if you plan to take your money out earlier, there will be penalties for early withdrawal. In the next 12 months, you will be earning around 1% to 4%.

Risk World

Includes stocks, bonds, mutual funds, real estate investment trusts, etc.

Principal, interest and earnings are not guaranteed. The gain is open-ended and you need to sell your financial instrument in order to realize the gain. Since the market will be moving a lot, it takes time to earn your money. You might gain 40%, or lose 40%, nothing can be guaranteed.

Hybrid World

Includes certificates of deposits from banks, as known as the Equity-Linked Certificated of Deposit, and the fixed indexed annuities.

Both of them start with a principal protection, which will link interest to an External Market Index. There will be penalties for early withdrawal in the “Hybrid World” too. You can earn anywhere from 0% to 25% in the next 12 months, average gain will be 6% to 10%.

After understanding the basic concepts of each “World”, you will be able to tell which investing world is suitable for you.  Remember, you can control your Risk Control Level.

To learn more, you can also reach Steve Sexton & the Sexton Advisory group at 1.800.560.2611 or [email protected]. Steve Sexton will provide more advice during the “Money Minute” segment of “San Diego Living” on Channel 6 every Tuesday.

Photo from woodleywonderworks via Flikr