Strategic Reserve Accounts

Strategic Income Group employs a number of strategies to help you get the most out of your investments.

One of those strategies – one that sets us apart from many other firms – includes the use of Strategic Reserve Accounts.

To understand how our Strategic Reserve Accounts work and their purpose, it’s important to familiarize yourself with a concept called dollar- and reverse dollar-cost averaging (follow the link to learn more).

Once you understand how dollar-cost averaging and reverse dollar cost averaging works, continue to learn how our unique Strategic Reserve Accounts may help you keep more of your money.

While what you’re about to read points out the downsides of reverse dollar-cost averaging and what we can do about it, it’s important to remember that dollar-cost averaging when investing for retirement can have a positive outcome.

For example, instead of paying off your mortgage early, you could use those dollars to invest and potentially come out ahead – but everyone’s situation is different (if you’re interested in this, check out The Tale of Two Couples).

But because reverse dollar-cost averaging works against you in retirement, our Strategic Reserve Accounts are available and may help you keep more of your money.

Strategic Reserve Accounts

Let’s say you’d like to withdraw $1,000 per month from your retirement account. Take a look at this typical retirement strategy:

Under typical circumstances, your investment manager will sell $1,000 worth of investments to ensure they can deposit the money into your checking account on time every month. If the value of the investment falls you are forced to sell more shares.

Thankfully, we have a plan to counteract the potential harmful effects of reverse dollar-cost averaging. Namely, Strategic Reserve Accounts. Strategic Reserve Accounts work as a buffer between you and the potential losses incurred by having to sell investments at a low price.

Take a look at how our Strategic Reserve Accounts work:

We recommend our clients start a Strategic Reserve Account – an interest producing money market account – with Strategic Income Group. When we start your Strategic Reserve Account we would fund it with 3 and 12 months’ worth of withdrawals. This account will maintain a balance of 3 and 12 months’ worth of withdrawals.

Should the markets drop, instead of selling your investments at a lower price to meet your withdrawal requirement, we would simply pull money from your Strategic Reserve Account instead and replenish it when the markets are higher. We are able to replenish the Strategic Reserve Accounts from interest, dividends, and the sale of the shares of the investments.

This allows us to strategically control the flow of money from your investment accounts to your checking account, which may result in better returns. No longer will we be forced to sell investments at a lower price because you need a certain amount of retirement account income every month. With a Strategic Reserve Account, we can attempt to sell at a higher price while at the same time pushing to allow you to take your monthly withdrawals.

At Strategic Income Group, we have a fiduciary responsibility to do the very best thing for our clients – and Strategic Reserve Accounts help us accomplish that goal.

To learn more about Strategic Reserve Accounts or to start one today, contact us. We’re happy to further explain the benefits and answer any of your questions. Strategic Reserve Accounts are just one way we can help our clients get the most out of their investment dollars!