Wednesday, July 20, 2016

The Illusion of Stability: Stable-Value Funds vs. Unicycles

July 19, 2016
That 'safe' retirement investment is about to change

Stable-Value Funds:

Investors are dependent on the credit quality of the underlying bond portfolio and the company providing the insurance. If the insurer fails, you may have to get in line with other creditors for your payout, said Gregory Kasten, founder and CEO of Unified Trust Company.


Riders are dependent on the quality of the underlying terrain and soft couches providing the insurance. If the couches fail, you may have to get in line with other riders at the hospital, says me, an anonymous blogger on the Internet.

Just looking for an excuse to share the video. No worries. There are no serious injuries. One has to admire his persistence!

Reminds me a bit of learning to snowboard in college. The falls were definitely when most of the learning took place. I was almost always riding that fine line between stability and instability, for I craved the speed more than I craved the stability. These days? Not so much. I prefer the stability over the speed, and you can see that in my investments.

Since retiring, I have no desire to chase yield at the expense of safety. No desire to eek out a modest "safe" return by investing in riskier things and paying for insurance to make them less risky either. Perhaps the thought of paying for an insurance company CEO's private yacht turns me off? Perhaps I don't want to ever be in a position where the insurance company fails, I lose a lot of money, but the yacht never gets sold to pay me back?

I am not getting more cynical as I age! Am not!! Well, maybe just a bit. If I am, it's for good reason though, I assure you. When something is called stable-value and yet the value is inherently unstable when stability is needed the most (during a financial crisis), my cynicism can only grow.

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