by John Darer® CLU ChFC MSSC RSP CLTC
Last week's stock market action should answer to the questions " Should I take cash over structured settlement and invest in stocks? and "Should you sell your structured settlement and invest in stocks?"
Ideally you should live off your income not your assets. You know what you have coming in from your "steady paycheck" and can set (and hopefully stick to) a budget, as well as plan for the future. Watching your pile of cash erode over time is like watching the sand drift down in an hourglass. Structured settlements provide a core of safe, secure guaranteed income to help mitigate the concern.
Some settlement purchasers suggest that you should sell your structured settlement and invest in something else. Some plaintiffs may see high flying stocks in the news and think that they should not take a structured settlement and invest in the stock market without a clear understanding of risk.
Apple stock gives us some great lesson to help illustrate risk and risk tolerance.
Flashback December 12, 2014 "Apple Stock Becoming The Ultimate Safe Haven" [Seeking Alpha]
Shares of Apple got crushed again Friday, falling $6.72, or 6%, for the day to $106.02. The stock is now down a bruising 8.5% just the week - making it an even worse performer in an ugly stock market.
If you invested $100,000 in Apple stock at its $134+ high earlier this year you would be down about over 20.6% or $20,600!
If you invested $100,000 in Apple stock On Thursday at the close, you would be down $6,720 in one day.
That's 2015. Apple also lost 43% of its value between its euphoric previous high in September 2012 through July 2013
According to the August 22, 2015 USA today, Apple is a top holding by individual investors - many of whom are new in the market. Its shares have benefited from the mobile data boom, which fueled much of the bull market. And Apple's enormous profit margins and surging record cash pile are a testimony of the company's ability to command premium pricing and customers' willingness to pay (emphasis added).
Apple's fall has now:
* Wiped out of 2015 gains. Apple has swung into the red for the year, taking away the one security blanket investors have had while the rest of the market suffered. Shares of Apple are now down 3.2% on the year - a rude awakening since the stock had been up as much as 22% through its high this year. Apple is better off than the market, which is now down 3.8% on the year, shares of Apple are now down a brutal 20.6% from their all time high hit earlier this year
Dangers lurk everywhere for personal injury victims who do not work with licensed insurance agents/brokers or financial advisers. On August 3rd, I discussed JG Wentworth "Promoter's" Awful Financial Advice to Structured Settlement Annuitants, after its ill advised sell structured settlement and buy GM stock pitch.
Then there's JRR Funding/Einstein Structured Settlements pitch "...That also means many structured settlement recipients would be better off selling the plan for cash and investing the cash in the stock market..."
An important part of any plaintiff lawyer's settlement discussion with his clients should include a discussion about volatility and the ability of the plaintiff to tolerate it. Bring is a settlement planner with transition expertise and skills in dealing with Sudden Money® issues.