Date: June 8, 2021

5 Common Concerns Investors Have Today

As COVID-19 continues to recede, investors must re-adapt to an investment environment less distorted by the economic effects of the pandemic. Add to this new environment some of the same concerns that existed pre-pandemic, and there’s a lot of fear and confusion about investing today and in the future.

To help investors navigate this interesting time, I publish regular articles to the Heritage Capital blog and speak to national and local media outlets. At Heritage Capital, we also created a new guide for investing post-COVID-19, which you can check out here.

Despite all of this information, I find that there are 5 specific areas of investing that merit further consideration. If you have a concern that is not addressed here, let’s talk! Contact me directly, and get the conversation started.


Have questions about investing post-2020? Contact Heritage Capital to see how we can help.


1. Risk Tolerance

At the time of this writing (June 2021), the S&P 500 has returned more than 40 percent over the last 12 months, despite many predictions to the contrary. Aggressive investors, those with the highest risk tolerance, did best, whereas conservative investors may have missed out the most.

Risk tolerance continues to be one of the biggest factors influencing portfolio performance. Investing too aggressively can be excruciating, whereas being too safe can result in lost opportunities.

This is why it’s so important for investors to get a better understanding of their financial risk tolerance and its implications. There are a number of applications that we use at Heritage Capital to help quantify your attitude toward risk. Once you understand your natural tendencies, you’re in a position to see how they will impact your potential returns and how you may want to re-allocates your portfolio holdings accordingly.

There will likely be reasonable growth in the upcoming year, due to extraordinary measures by the Federal Reserve, unprecedented spending by Congress, continued rollout of the vaccines, stronger corporate earnings, a continuation of low interest rates and a significant increase in employment. The stock market should perform well, providing returns below those for private investment but above those for low-risk debt that will have trouble keeping up with inflation.

Many risk-averse investors feel the pain of losses twice as intensely as the joy of similar-sized gains. The operative word here is “feel,” which mitigates against a non-emotional strategic approach to investing. Fear leaves investors underexposed to equities and overexposed to fixed-income securities. Fear can cause panic-selling in a down market, a decision that can be hard to recover from.

If you think that retirement means owning only cash and bonds, think again. After 40 years of good times for bond investors, those people have just begun to feel the pain of rising interest rates, not even considering what may happen if inflation continues to soar. You may live for decades after retirement, and overly conservative portfolios will have trouble maintaining their buying power over time. Let’s talk about your risk tolerance and the implications it has on your portfolio.

For more on what can happen if your portfolio is positioned too aggressively or too passively, read our recent blog post: #1 Question Asked Since the Pandemic: Am I Invested Correctly Post-COVID-19?


2. Claiming Social Security the Proper Way

Another aspect people really need to understand is the trade-off between taking your Social Security benefits early and waiting until later to file a claim. A breakeven analysis can show you the impact of starting benefits at different ages. Keep in mind that you won’t receive your Primary Insurance Amount (PIA), until you reach full retirement age – between 66 and 67, based on your date of birth.

You could claim your benefits as early as age 62 and receive only 70.2 percent of your PIA. At the other extreme, you could wait until age 70 and receive up to 128 percent of your PIA. Until you reach your full retirement age, you’ll have up to 85 percent of your benefits withheld if you continue to work. It can take up to 15 years to recoup your withheld benefits.

If married (or divorced), it’s also important to understand how spousal benefits work. There are benefits to different claiming strategies between spouses, in which both spouses temporarily collect benefits based upon just one spouse’s work earnings record. Make sure you understand your options before filing your claim for Social Security benefits.

Check out our new guide: Understanding Social Security.


3. How Inflation Impacts Your Finances

Inflation eats away at your purchasing power. This is even more true for retirees, since they tend to spend more money on high-inflation expenses, like healthcare.

The Centers for Medicare and Medicaid Services (CMS) reported that, for the year 2018, general inflation averaged 2.4 percent while healthcare inflation clocked in at 4.6 percent. The cost-of-living increase that the Social Security Administration provided in 2019 was only 1.6 percent, far behind the rate of healthcare-cost increases.

Your portfolio needs not only sufficient equity investments to keep up with inflation, but also investments that thrive in an inflationary environment, no matter what your age. A retirement portfolio that is too conservative could eventually provide insufficient income to meet your needs.

For more on how inflation affects your retirement plan, read our recent blog post: Do You Really Need a Financial Advisor? Investing Mistake #1: Not Considering Inflation!


4. If You Have Enough to Retire

No one wants to outlive their money, but people are now routinely living into their late-80s and 90s. Remember, each generation lives longer than the previous one. As you approach retirement age, ask yourself whether you have enough money to retire.

For many people, it makes sense to postpone retirement for several years as they continue to contribute to their retirement accounts rather than drawing the accounts down. Work with a financial advisor to establish the best-, average- and worst-case scenarios to help ensure you have enough assets (including investments, annuities, cash-value life insurance, trusts, etc.) to retire with some assurance that you’ll not run out of money later in life.

We discussed this in more detail in a recent blog post: Does Your Retirement Plan Cover You for Life?


5. Market Volatility

Market volatility isn’t a bad thing – it’s the part of investing that separates those who react emotionally versus those who invest with a process and can take advantage of opportunities. Tying back to our discussion of risk tolerance, there are ways to tame market volatility without sacrificing the possibility of good returns. These include tried-and-true techniques, such as strategy diversification and allocation over a wide variety of assets. The basic idea is to be in a position to benefit from offsetting movements in different markets.

Talk to a financial advisor about mitigating risk through techniques such as hedging, pairs trading, stop and stop-limit orders, use of convertible securities and broadening the assets classes you invest in.

Read our recent blog post: Investing in Volatile Markets: Heritage Capital Addresses Concerns.



So, are you invested correctly post-2020? There are several important factors to consider to help ensure a comfortable retirement. They all share a dependence on unbiased information and an understanding of important financial topics. If you are not currently working with a financial advisor to help protect against disastrous mistakes and lost opportunities, now is the perfect time to do so.

The team at Heritage Capital has been helping people retire with confidence for more than 30 years. We use active investment management and comprehensive financial planning to help you control your risks, so you can have a successful retirement no matter what happens with the markets or your world. Headquartered in the greater New Haven, Connecticut area, Heritage Capital helps clients nationwide. The trick to financial success is starting the conversation!


social security eBook Heritage Capital



Paul Schatz, President, Heritage Capital