LATEST NEWS

Can You Manage Your Future?

I don't envy you, today's retirees and soon to be retirees. I don't think there's been a more difficult and contentious time to retire within the last 100 or so years. With pensions disappearing, benefits being slashed, taxes set to skyrocket, real inflation soaring, incredibly correlated volatility in the global markets, and an obvious governmental intrusion into our daily lives, I think many have become envious of the previous generations of retirees.

I get it. I'm with you. This isn't the America I was raised in. These aren't the market returns many hoped for or were told to expect. This isn't the utopic price environment we've all been accustomed to. And this certainly isn't the growth and recovery we were promised.

In January 2009, gasoline was $1.89 per gallon, and now it's just shy of $4. Long-term unemployment has tripled over the same time period. Our national debt is approaching $16 trillion, and the Federal Reserve has manipulated interest rates at the bank to darn near 0 percent, forcing uninformed retirees and aspiring retirees to take unnecessary market risk.

So what are you going to do about it? Accept things the way they are? That's not what American's do. I believe American exceptionalism and ingenuity is still alive no matter how much we're told to be ashamed and told that we're average.

What does it look like to declare your independence from the many hurdles that face you as you enter or prepare for retirement? The first step is to identify where your plan/planner is lacking and take corrective action. This stage of life is too serious, too treacherous to not get a second opinion, especially in today's whipsaw market.

With that said, this is the Smarter Investor column, so I want to share one alternative investment idea to help you take back control of your financial future. Retail investors underutilize this asset class, but it has been an integral successful ingredient to many institutions, pensions, and endowments. The benefit of adding a dash of managed futures in your portfolio strategy is simply to help you control risk (limit losses), supercharge diversification, and enhance overall returns.

Managed futures fund managers typically employ one of two strategies to control risk: market neutrality and trend following. Both strategies utilize proprietary automated trading systems that aim to remove human emotion, such as fear/greed/bias, from trading decisions and rely on stop-loss orders to limit losses and let profits run.

Even allocating a small percentage of your plain-vanilla stock/bond portfolio to this asset class can help to save a lot of pain during volatile markets. With just a 20 percent allocation to managed futures, overall risk can be reduced by almost 82 percent.

This is because managed futures have virtually no correlation to most traditional asset classes. Furthermore, managed futures funds generally perform well during negative economic or market conditions. Compare the max drawdown of a stock-only portfolio with a more diversified portfolio containing not only stocks, but also managed futures, and the risk/reward relationship is remarkably better. The max drawdown in a stock portfolio would be -41 percent, but a portfolio that included managed futures would be limited to -7.5 percent.

As a point of reference, Black Monday in 1987 saw the largest one-day loss in history, but managed futures reported +20 percent returns. Similarly after September 11, the stock market plummeted (16.3 percent), but managed futures gained +8.3 percent in the same period. Better yet, managed futures did exceptionally well during the crash of 2008, posting positive returns.

While many advisers and investors only diversify among different stock sectors or bond maturities, managed futures funds can help provide better diversification. Broader diversification is achieved through a mixture of commodities (corn, coffee, sugar, cotton, etc.), energies (oil, ethanol, natural gas), metals (gold, silver, copper, etc.), currencies (U.S. dollar, Brazilian Real, etc.), equities (Dow, Hang Seng, etc.), and interest rates (10-year treasury notes, EuroDollar, etc.) just to name a few.

An initial investment of $10,000 in the S&P 500 in 1980 would have been worth an estimated $287,890 by 2008. While this performance is certainly impressive, the same investment in managed futures would have produced $513,467 over the same time period, almost double the S&P 500.

When selecting a retail fund, private pool, or individual futures manager, it's important to consider their past performance and fee arrangement. Total management fees in this asset class tend to be higher than in the equity or fixed-income markets. Typically, this is due to the expertise, access, and availability to some of the best managers. I imagine most investors would be willing to pay a higher fee for potentially higher returns than what can be found in stocks/bonds (so be sure to request proof of performance net of fees).

With no end in sight for the European debt drama, an utter lack of understanding in Washington for what makes America exceptional, and the reckless abandon promoted by Wall Street investment banks/brokers, you and I are in the position to do exactly what our forefathers asked us to do: accept individual responsibility for our decisions and actions. Do not delay. Rise to the occasion, declare your independence, and rescue your financial future.

Robert Russell is CEO & CIO of the Ohio-based Russell & Company, a private wealth management firm specializing in helping affluent individuals ages 45 and up create and preserve their wealth. He co-hosts a radio show, authors The Rob Report blog, and is a frequent contributor to FOX Business and CNBC.

Securities offered through Kalos Capital, Inc., Member FINRA, SIPC. Investment Advisory Services offered through Kalos Management, Inc., 3780 Mansell Rd. Suite 150, Alpharetta, GA 30022, (678) 356-1100.

Russell & Company is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.



More From US News & World Report

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
  • Mistry replies on Tata Sons' 'counter-allegations' IANS - 6 hours ago

    The replies came through an affidavit which was filed by Mistry's investment companies to the NCLT's Mumbai bench. The rejoinder comes after Tata Sons had filed an over 200-page affidavit with the NCLT earlier in January, rebutting charges levelled … More »

  • Software to comply with Indian labour laws unveiled IANS - 6 hours ago

    "The SaaS-based plug-and-play tool gives free access to 40,000 pages of the Indian labour laws for compliance management by enterprises, factories, shops and businesses in the country," said Simpliance Founder Anil D'Souza. "Labour law compliance … More »

  • 50% of BSE IPO subscribed on 1st day of offering IANS - 8 hours ago

    Mumbai, Jan 23 (IANS) Stock exchange major BSE's initial public offering (IPO) was subscribed by 50 per cent on the first day of the Rs 1,243.43 offering which started on Monday. According to the data ... … More »

  • Note ban boosts deposits, lowers bank loan growth: Report IANS - 8 hours ago

    New Delhi, Jan 23 (IANS) The recent demonetisation in India led to an immediate jump in current account and savings account (CASA) deposits, incremental lending saw a massive drop, while digital banking witnessed a major surge, a report said on … More »

  • Okinawa Autotech launches e-scooter Ridge IANS - 8 hours ago

    New Delhi, Jan 23 (IANS) Electric two-wheeler manufacturer Okinawa Scooters on Monday launched its first offering in the Indian market an e-scooter -- Ridge -- priced at Rs 43,702 (Ex-showroom, Delhi). ... … More »

  • Differential impact of demonetisation across ABS transactions: Ind-Ra IANS - 8 hours ago

    Mumbai, Jan 23 (IANS) Credit ratings agency India Ratings and Research (Ind-Ra) on Monday said it has observed differential impact of demonetisation across asset-backed securities (ABS) transactions. According to the agency's report -- Indian ABS … More »

  • India against EU, Canada-proposed dispute settlement at WTO IANS - 9 hours ago

    New Delhi, Jan 23 (IANS) India has opposed an informal proposal by the EU and Canada for a global investment pact with an investor-to-state dispute settlement (ISDS) mechanism at the WTO by which corporates can take governments to international … More »

  • EIH's Q3 net profit up 8.29% IANS - 9 hours ago

    Mumbai, Jan 23 (IANS) Hospitality major EIH on Monday reported a rise of 8.29 per cent in its stand alone net profit for the third quarter (Q3) of 2016-17. The company which was formerly known as the 'East ... … More »

  • Asian Paints net profit up, hit by demonetisation IANS - 9 hours ago

    Mumbai, Jan 23 (IANS) Paints major Asian Paints on Monday posted a marginal 1.5 per cent rise in consolidated net profit to Rs 489.31 crore in the quarter ended December 31, as compared to Rs 482.02 crore ... … More »

  • SBI calls for raising income tax exemption limits IANS - 10 hours ago

    Mumbai, Jan 23 (IANS) Presenting an agenda for the forthcoming Union Budget at a time when banks are flush with funds post-demonetisation, state-run SBI on Monday called for raising various income tax ... … More »

  • Bharti Infratel's Q3 net up 25% IANS - 11 hours ago

    New Delhi, Jan 23 (IANS) Telecom tower infrastructure services provider Bharti Infratel's consolidated net profit went up 25 per cent in the third quarter of 2016-17, the company said on Monday. The company posted a net profit of Rs 620 crore for … More »

  • Budgetary expectations lift Indian equities IANS - 11 hours ago

    Mumbai, Jan 23 (IANS) Hopes of budgetary incentives and healthy buying in metal, automobile and oil and gas sectors lifted the Indian equities markets on Monday. However, profit booking at higher levels ... … More »

  • FRBM Committee submits report on fiscal consolidation roadmap IANS - 11 hours ago

    New Delhi, Jan 23 (IANS) The Fiscal Responsibility and Budget Management (FRBM) Committee, headed by former Revenue and Expenditure Secretary N.K. Singh, submitted its report to Finance Minister Arun Jaitley on Monday with recommendations on the … More »

  • NEXTracker, CleanMax Solar to set up tracker system in Chennai IANS - 12 hours ago

    New Delhi, Jan 23 (IANS) American solar solutions provider NEXTracker announced on Monday that it is partnering with India's CleanMax Solar to supply a 30 MW solar tracker system to a project in Tamil Nadu. "NEXTracker has partnered with CleanMax … More »

  • HUL's net profit up 7% in Q3 IANS - 12 hours ago

    Mumbai, Jan 23 (IANS) FMCG major Hindustan Unilever on Monday reported a seven per cent increase in its net profit to Rs 1,037.93 crore in the quarter ended December 31, 2016 as compared to Rs 971.66 crore in the corresponding quarter last fiscal … More »

  • Strong rupee, budgetary expectations lift equities IANS - 14 hours ago

    Mumbai, Jan 23 (IANS) Rupee appreciation, coupled with hopes of positive incentives in the upcoming Union Budget and broadly positive Asian indices, lifted the Indian equities markets on Monday. The key ... … More »

  • Global semiconductor revenue to grow 7.2% in 2017: Gartner IANS - 15 hours ago

    Mumbai, Jan 23 (IANS) Worldwide semiconductor revenue is set to hit $364.1 billion in 2017, an increase of 7.2 per cent from 2016, representing a turnaround for the industry as it experienced 1.5 per cent growth in 2016, market research firm Gartner … More »

  • itel unveils 4G VoLTE-enabled smartphone at Rs 7,550 IANS - 15 hours ago

    New Delhi, Jan 23 (IANS) itel Mobile, part of Chinese mobile manufacturer Transsion Holdings, on Monday launched a new it1518 4G VoLTE-enabled smartphone at Rs 7,550. The 5-inch device houses 8MP rear ... … More »

  • Indian equities buoy on strong rupee, budgetary expectations IANS - 16 hours ago

    Mumbai, Jan 23 (IANS) Indian equities markets traded on a flat-to-positive note during the mid-afternoon trade session on Monday, as rupee appreciation, coupled with hopes of positive incentives in the ... … More »

  • Amazon India to empower Naga women entrepreneurs IANS - 16 hours ago

    Bengaluru, Jan 23 (IANS) With a view to drive digital literacy among women entrepreneurs in Nagaland, Amazon India on Monday partnered with the state government and the National Skill Development Corp (NSDC) to provide them a global platform to sell … More »

  • 5 reasons you should bother about Budget 2017 Simplus Information Services - 18 hours ago

    The government reveals the income and expenditure incurred in the year gone by. It is the estimate that the government makes about the income and expenditure for the year ahead. The government announced the demonetization of currency notes in … More »

  • Is digitisation the need of the hour? Simplus Information Services - 18 hours ago

    What makes digitisation or digitalisation so important? The conversion of data from analogue to digital has been going on since the 1950s. Nowadays, digital technology is helping restructure businesses, organisations, and economies. … More »

  • Coal India discontinues Forward e-auction Scheme 2007 IANS - Sun 22 Jan, 2017 7:12 PM IST

    Kolkata, Jan 22 (IANS) Following special forward e-auction for power sector and exclusive e-auction for non-power consumers being conducted in a "regular manner", Coal India Ltd (CIL) has advised its subsidiaries to stop conducting the Forward … More »

  • Kudankulam Unit 2 generates full capacity of 1,000 MW IANS - Sun 22 Jan, 2017 7:08 PM IST

    Chennai, Jan 22 (IANS) The second 1,000 MW atomic power reactor at the Kundankulam Nuclear Power Project (KNPP) in Tamil Nadu has attained its maximum capacity, the Russian builders announced on Sunday. "Kudankulam NPP Unit No 2 has for the first … More »

  • Non-life insurers' premium income grows over 25% in December IANS - Sun 22 Jan, 2017 5:04 PM IST

    Kolkata, Jan 22 (IANS) Non-life insurance companies posted over 25 per cent increase in their gross premium income (direct premium income underwritten) to Rs 9,760.23 crore in December compared to Rs 7,777.38 ... … More »

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    17.53+0.18+1.04%
    SUZLON.BO
    330.85-4.45-1.33%
    GRUH.BO
    80.75-0.40-0.49%
    IBREALEST-.BO
    929.25+21.95+2.42%
    BAJFINANCE.BO
    181.30+9.85+5.75%
    HINDALCO.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    67.80+11.30+20.00%
    BELLACASA.BO
    27.00+4.50+20.00%
    ORIENTHOT.BO
    2,288.85+381.45+20.00%
    BHARATRAS.BO
    215.25+35.85+19.98%
    DHPIND.BO
    133.00+22.15+19.98%
    KATWAUD.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    39.10-4.40-10.11%
    VARDHINDQ.BO
    87.40-9.70-9.99%
    SAPL.BO
    33.45-3.70-9.96%
    ABHIINFRA.BO
    79.90-8.65-9.77%
    BINNY.BO
    20.30-2.10-9.38%
    TRENDELEC.BO
  •  
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

    •  
      Sign-in to view quotes in your portfolios.