Customer Profiles: Asset Revesting Engineer
Eric is a professional electrical engineer in his early fifties. His wife, Jennifer, is a stay-at-home mother to their three teenage children. As the sole income earner for his family, Eric needs to make an ever-increasing amount of money as his children reach the end of high school and plan to attend university. After an early promotion within his company, Eric began taking action with his money by working with a financial advisor in 2006.
Eric doesn’t know much about finance, but he knows his money can do more good than sitting in a low-APR savings account or bonds. He wants returns that can help his children start out with solid footing in the adult world, and he wants to be able to take his wife out for regular dates and weekends away without worrying about his wallet.
When he isn’t spending time with his family, Eric spends hours at home studying and learning more in his field to better his craft. Between his demanding career and home life, Eric does not have the time or energy to research financial investing or closely monitor the movement in his portfolio.
During the pandemic, Eric watched some older colleagues become disabled after contracting COVID-19. Their bank accounts were depleted after losing insurance and time spent in the hospital on uncertain life-saving treatment. This pretty much scared him into action.
Eric went all-out on finding the best advisor he could. He needed to know that if he fell severely ill, his family could maintain their current lifestyle and still hold on to their dreams for the future. Eric’s advisor listened to his requests and recommended a diversified, buy-and-hold portfolio with an extensive range of investments spread over many sectors, a common strategy touted and used by Fidelity, Schwab, and other firms. Because the buy-and-hold strategy had been so dominant and widely used for decades, most people, including Eric, thought it was the only and best approach to investing.
Eric’s financial advisor put a chunk of his money into potential growth stocks and spread the rest of Eric’s capital in blue chip stocks for dividends and some bonds. The advisor wasn’t selling any holdings to realize gains, assuming there would be more significant gains to take later on. His advisor reassured Eric that his money was growing—which, according to his statements, it was.
What Eric’s advisor failed to share is that other routes for investment involve less stress and volatility. Even as the share prices of the growth stocks began to fall and the bond market collapsed, the advisor told Eric not to worry and that things would turn around soon.
Watching the losses mount ever higher, this advice became difficult to swallow. Eric remembered how long it took him to recover from the 2008 financial crisis, and he didn’t have that kind of time anymore.
Overall, Eric’s money was dwindling. He felt confused and misled by his advisor. Wasn’t his money supposed to grow? Why was so little happening? Why was he paying someone who seemed only passively to manage accounts? At this rate, he might as well have kept all of that cash sitting in a savings account—at least then, it wouldn’t have bites taken out of it.
Fed up with not really understanding what was happening but knowing something was definitely wrong, Eric shifted his study hours from engineering to learning all he could about investing. He signed up for an investment newsletter he had heard about from a colleague at a job site. This newsletter aimed to educate its subscribers by helping them learn how to navigate the markets safely. Asset Revesting was an investment method that tossed aside strategies like buy-and-hold and diversification in favor of holding assets that were increasing in value only.
The asset revesting newsletter shared their market entry and exit signals. It protected capital by setting stops and grew accounts by pulling off profits to lock in gains. For example, when a stock or ETF stops appreciating, it is sold, and the funds are moved to an appreciating asset. Holding on to depreciating or stagnant investments in the hopes that they will soon rise in asset revesting is considered a dangerous game and often a senseless way of playing with one’s hard-earned money.
Investors who use the asset revesting method follow an asset hierarchy, so when the top asset falls, money is revested in another position of strength. If all assets indicate too much volatility, a cash position is held until things level off and a new trend emerges. Since staying in cash is what Eric wished he’d done years ago, this sounded like a good safe play to him.
After seeing the newsletter’s value, Eric decided to look further into asset revesting signals and autotrading services as, realistically, his demanding career did not allow him to monitor the markets every day. He learned that having his portfolio autotraded allowed him to step away from the computer while his trades were executed in his retirement account for him with the rules of asset revesting in place.
With this new approach, Eric’s portfolio drops much less often and with less volatility because the strategy caps his potential losses at 6%, far lower than the 38% he experienced with the buy-and-hold method. The asset revesting signals and autotrading service also ensures that he’s taking gradual profits at target points and then raising his protective stops to lock in his gains. As his money begins growing consistently, Eric feels it is in safer hands.
A few months after switching to an asset revesting strategy, Eric can pull income from his investments to put towards three college funds for his teenagers. As his portfolio balance rises, he feels less stress about reaching retirement savings goals and is much more comfortable spending money. Not wanting his wife to struggle with understanding their finances should he pass away first and also wanting to help his teenagers learn what strategies may be better to use at different stages in their lives, Eric slowly began sharing his journey with them.