Every week, Allworth Financial’s Amy Wagner and Steve Hruby, CFP®, answer your questions. If you, a friend or someone in your family has a money issue or problem, feel free to send those questions to [email protected].
Carl in Cincinnati: Do you recommend using buffered ETFs?
Answer: First, so we’re all on the same page, let’s quickly explain the concept behind buffered ETFs (exchange-traded funds). They emerged around 2018 and have grown in popularity over the last few years with investors who are looking to strike a balance between risk and reward. Because, essentially, these types of funds are designed to provide a predetermined layer of protection against market downturns while still allowing for some upside potential. They give you a “buffer,” if you will, and help smooth out volatility within your portfolio.
For example, if an ETF has a 10% buffer and the market drops by 15%, you will only feel the impact of a 5% loss. But at that same time, there is also a ceiling on gains. For instance, let’s say the ETF has a 20% cap and the market rises by 30%. Your return would be limited to that 20%.
But it’s also important to note that these loss and gain limits only apply during a set period of time called the “outcome period” (typically one year) – buying or selling too far into this window is generally not recommended since you then wouldn’t be taking full advantage of the fund’s benefits. When the outcome period is over, the ETF rebalances and (potentially) resets its buffers.
Of course, buffered ETFs come with a few downsides as well, including higher fees than traditional ETFs and the fact that they usually don’t pay dividends.
Here’s the Allworth Advice: If you’re someone who worries about significant market dips but still wants to participate in market gains, buffered ETFs could be a nice addition to your investments to help ease those concerns. (In fact, we use them with some of our Allworth clients.) But like anything, it all depends on your specific needs and goals. Be sure to consult with a fiduciary financial advisor if you have further questions.
K.D. from Cheviot: I spotted something wrong on my credit report. How do I get it fixed?
Answer: How frustrating! Thankfully, disputing it is a fairly straightforward process. First, be sure to gather any supporting documents that back up your claim, like payment records or correspondence. This will help strengthen your case.
Next, contact the credit reporting agency that provided the report. There are three major agencies: Equifax, Experian and TransUnion. You can usually file a dispute online, by mail or over the phone. If you choose online, simply visit their website, locate the dispute section and follow the prompts.
For mail, you’ll need to include a letter with your supporting documents (the Consumer Financial Protection Bureau has a template you can use). It’s a good idea to keep copies of what you’re sending and opt for certified mail to keep a record of your correspondence.
The credit agency typically has 30 days to investigate your claim. If you’re not satisfied with the results, you’re allowed to include a statement on your credit file to explain the dispute.
The Allworth Advice is that it’s your right to dispute inaccuracies on your credit report, so we encourage you to make this a priority.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered through Allworth Financial a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call (513) 469-7500.