Patrick Carroll

Dave Shober

Thomas Nicolay

Investments uncorrelated or indirectly correlated to the stock market – such as CDs, Treasuries and annuities – are getting another look these days. Here's a look at some of the options for investors.

Banking on the future. Under recessionary conditions, short-term CDs, money market accounts and Treasury notes sometimes appeal to those who want to receive a competitive yield versus stocks and bonds over six months or a year with less risk. Treasuries are also free from state income tax, and some Treasuries are TIPS (Treasury Inflation Protected Securities), meaning they are hedged against inflation. The comparative certainty of all these investments appeals to people seeking diversification.

Bonding together. In this kind of economic climate, some investors may also be attracted to bonds and bond funds. Bonds, after all, generally offer the investor a reliable payment stream and repayment of principal. Besides municipal and government bonds, there are also corporate bonds, including fixed-rate capital securities offering predictable monthly, quarterly or semiannual income. Some investors like short-term bond funds, which typically invest in commercial paper, bills and certificates of deposit. Often, bond funds generate monthly income, and some allow check-writing so people can meet emergency cash needs. Some exchange-traded funds (ETFs) are bond ETFs, which tend to favor investment in inflation-protected bonds.

A contractual choice. Annuities are another type of investment with little or no correlation to the stock market. Under these contracts, you make payments to an insurance company, which in turn agrees to make payments to you, immediately or in the near future. A fixed annuity offers guaranteed income payments and a guaranteed rate of return.* A variable annuity usually allows you the choice of stock market participation (usually via mutual fund investment) with possible protection of your principal. An equity-indexed annuity offers potential returns based on market fluctuations and calculations tied to an equity index. There is a possibility of loss of principal if the index linked to the annuity declines, but it usually has a minimum rate of return guaranteed by the insurer.*

Is it time to diversify? You may want to learn more about these investments, and others that may help you modify your portfolio for a recession or downturn. Before you make any investment decision, be sure and talk with a qualified financial professional. Keep in mind that diversification does not ensure a profit or protect against a loss. For more information or to set a no-obligation appointment to speak to one of our financial planners, Patrick Carroll, Thomas Nicolay, or David Shober, please call 301-990-4395. Consider attending one or all of our upcoming seminars, held at the MAFCU headquarters. Visit the News & Events section of our web site for a complete listing of upcoming seminars.

The opinions expressed herein are those of Patrick Carroll, an Investment Advisor Representative with Wealth Strategies Group (WSG). WSG provides financial planning assistance to Mid-Atlantic Federal Credit Union members. Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser, Wealth Strategies Group, Mid-Atlantic Federal Credit Union and NPC are separate and unrelated companies. Patrick Carroll may also be contacted at wsgmd.com or at wsg@natplan.com.

• Not federally insured.
• Not guaranteed by this financial institution.
• May lose value.