Is Speculation to be Avoided by Prudent investors?


At one time it was common to draw a rather sharp distinction between “investment” on the one hand and “speculation” on the other. For example, high-grade bonds were considered “investments” while common stocks were viewed as “speculative”.

Now, however, such distinctions are often blurred. Good grade common stocks generally are looked upon today as investment-grade securities. Although many people today invest for capital gains as well as for dividends or interest income.

In general, however the term speculation probably can be used to mean the purchase of securities or other assets were it is hoped that their fluctuations in value will produce relatively large profits over a comparatively short period of time. In other words, the speculator takes advantage of large risks in hopes of large rate gains.

Is speculation to be avoided by prudent investors? The answer seems to be that it depends it depends on such things on how much of the total investment portfolio of the investor wants to risk in speculation. It depends on what other kinds of assets are available, how good the investor or his or her advisors are speculating, and whether the investor has a temperament to make speculative losses as well as speculative gains.

It has been our experience that investors do not like losses. While speculation is not necessarily bad, in fact some persons are successful speculators, it seems reasonable to say that for the vast majority of New Mexican’s most are not really prepared to speculate successfully. The risk in owning stocks, mutual funds, and other types of investments cause worry. Your portfolio can be lost in an econonic downturn or recession. Most people generally are much better off investing conservatively for the long haul. Don’t you agree?

Realistically, owning an indexed annuity can drastically reduce your risk. In fact, most people in Albuquerque who purchase an annuity rarely loose any principal. Why? An annuity provides contractual provisions which guarantee certain benefits to the owner. For example, a guaranteed interest rate, tax deferred growth. Other benefits may include insurance riders which eliminate the risk of inflation, or income riders which guarantee income. Who doesn't like getting a check in the mail every month guaranteed?

Our annuity product may be suitable for your financial situation as part of your financial plan. Especially, if you are a type of investor who is conservative but like a higher rate of return than what banks and wall street types offer. Contact us here at Insured Portfolios for an appointment to have a financial needs analysis of your retirement accounts. We are local here in Albuquerque and we care.  Call 505-750-4363.