Finance
What to know before investing in buffer ETFs
Investors may want to consider buffer ETFs to hedge the recent market volatility.
Bruce Bond, CEO of Innovator ETFs, sees an opportunity in buffer exchange-traded funds to offer some protection from the market’s downside.
“This [strategy] fits a group of people that are interested in getting exposure to the market, but not taking the full risk of the market,” Bond told CNBC’s “ETF Edge” on Wednesday.
Innovator ETFs issue monthly buffer ETFs. Their August ETF is under the ticker PAUG and offers 15% downside protection.
“If someone wants to invest in the S&P 500, they can get right in and do that,” Bond said. “They have 15% protection on the downside, and they have 12.8% opportunity on the upside.”
Bond recommends investors hold these ETFs until the end of the year, as the funds are constructed around one-year options within the portfolio.
“At the end of the year, the options are fully valued, and then we reset it for a following year,” Bond said. “Next August, they would fully value, then we would reset it for another year.”
Index Fund Advisors’ Mark Higgins expressed his skepticism of strategies like buffer ETFs that allow investors to hedge volatility.
“My concern would be a lot of investors are creating a very expensive solution for what is ultimately a simple problem,” the senior vice president at Index Fund Advisors said in the same segment. “They need to be more comfortable with the normal volatility of markets.”
Higgins believes there are cheaper solutions to navigate uncertainty in the markets — the cheapest being not looking at your portfolio too often and talking with your advisor before making any drastic moves out of surprise or fear.
“I think financial advisors that are doing their job can provide the calm,” Higgins said.
Finance
Stocks making the biggest moves midday: Netflix, Apple, CVS Health, Lamb Weston, United States Cellular and more
Barrons Roundtable discusses reports that Gen Z members are aggressive about wanting to retire.
Gen Z is the youngest generation of adults today, but with many struggling to make ends meet, a growing proportion say they do not expect to retire and few are socking away money to do so.
A new report from the TIAA Institute and UTA’s NextGen Practice found that a greater share of these adults age 27 and below do not anticipate retiring – at least in the traditional sense – after prior data showed nearly half of young adults either don’t want to retire, don’t believe they will be able to afford to, or are not thinking about it at all.
Gen Z as a whole has a very different view of retirement than previous generations, and a growing proportion of young adults say they do not plan on retiring at all. (iStock / iStock)
What’s more, just 20% of Gen Z respondents of working age say they are saving for retirement at all. While planning for retirement is important for everyone, saving for the future is critical for this generation that is projected to live past 100 years old. Yet, a higher cost of living could be impacting their ability to do so.
The study found that almost one-third of Gen Z (29%) are living paycheck-to-paycheck, with most of their money going to funding their basic needs, making it increasingly difficult for them to achieve financial milestones like homeownership while saving for their financial futures.
THIS AVOIDABLE SPENDING HABIT IS CREATING A RETIREMENT ‘CRISIS,’ FINANCIAL EXPERT WARNS
“Thirty-six percent of respondents cited high debt or low income as the primary reason they are not saving for retirement,” Surya Kolluri, head of the TIAA Institute told FOX Business. “Gen Z is spending more on essentials than previous generations.”
Inflation is weighing on Gen Z’s finances more than prior generations, data shows. (iStock / iStock)
Kolluri said it is true that Gen Z is bearing the brunt of inflation more than the generations that preceded them, noting that as of this year, the annual inflation rate for Gen Z was half a percent higher than it was for other generations at the same age.
But Kolluri pointed to some positive findings in the data, too. He said that while only 1 in 5 reported saving for retirement, 66% of those who are saving for retirement are doing so through 401(k)s.
Empower President and CEO Ed Murphy discusses retirement planning on ‘The Claman Countdown.’
There is also at least an awareness amid Gen Z’ers that it is important to save for the future. Eighty-four percent report saving a portion of their income each month (albeit not for retirement), and 57% say they have a budget that they stick to.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Kolluri noted 52% of Gen Z reported putting savings into savings accounts because they value the liquidity that supports current financial freedom.
“They do not equate saving for retirement as helping to ensure their financial freedom later in life…and ‘freedom’ is a concept that is very important to Gen Z,” he said. “They want flexibility and access to savings if and as they want.”
Guess which American president was the best with money?
Stocks making the biggest moves midday: Netflix, Apple, CVS Health, Lamb Weston, United States Cellular and more
MarketWatch 50 returns: These are the people having an impact on your money right now
Are American progressives making themselves sad?
U.S. Beneficial Ownership Information Registry Now Accepting Reports
CPA licensure program off to ‘promising’ start
-
Personal Finance1 week agoInvestors face delays moving certain assets from TreasuryDirect
-
Stock News1 week agoBeleaguered Stellantis ousts CFO, other top execs in bid to ‘redouble’ its focus
-
Economics1 week agoThe Democrats will struggle to retain the Senate
-
Economics1 week agoHurricane Milton inundates Florida
-
Economics1 week agoInflation rate at 2.4%, topping expectations
-
Economics1 week agoProducer price index September 2024:
-
Personal Finance1 week agoOzempic drives up health-care costs, whether you can get it or not
-
Finance1 week agoWells Fargo WFC Q3 2024 earnings