Finance Blog

In addition to Anthony Pellegrino’s work at Goldstone Financial Group, helping clients secure their financial futures, Anthony also contributes regularly to the Goldstone Financial Blog. Here, you can read through the various articles that Anthony Pellegrino has written.

The ABCs of ETFs: The Basics of Exchange Traded Funds

The ABCs of ETFs: The Basics of Exchange Traded Funds

Mutual Funds have long been accepted as the preferred investment vehicle for investors who are looking to actively manage their stocks while strategizing about how to best play the stock market. For investors who prefer more predictable, safer returns with less daily maintenance, though, a vehicle called an Exchange Traded Fund, or ETF, may be a better fit.

ETFs, which have been around since the early 1990s but continue to gain traction in today’s market, are programmed to track and mirror the performance of stock indexes that are comprised of all different kinds of stocks. An ETF can be set to track the performance of an entire national economy, for example, or the performance of a physical commodity, like silver. There are even ETFs that represent the scope of a full index, like the Dow Jones, and track the movement of all of that index’s stocks as one body. Because of their wide range of applications, ETFs offer investors a great way to diversify their portfolios with a single investment for a mere fraction of the price and effort that it would take to track stocks independently.

To explain how an ETF works: say you wanted to start investing in the gold market. One way to accomplish this goal would be to purchase ten physical bars of gold and lock them away in a safe. However, a much simpler way to invest in gold would be to buy shares in an ETF called GLD, which tracks the market share of gold. Because ETFs are traded on stock exchanges globally, they possess some of the same appealing traits as shares: you can buy and sell ETFs from as little as one chain, you can see their accompanying order books, and you can see the real-time cost of these shares throughout the trading day. And like index funds, ETFs offer less portfolio turnover than more actively managed funds, which require daily or weekly maintenance and attention. By investing in the GLD ETF, you’d be entering a very promising and transparent market at a very low threshold and without much risk, which would mean that you could expect to reap the benefits of a booming gold market with relatively little chance for failure. It is this ease of use and transparency that make ETFs so viable and appealing to investors who care more about steady returns and passive management than playing fast and loose with the money that they’ve worked so hard to make.

Of course, as is the case with any investment vehicle, there are some aspects of ETFs that could be considered pitfalls. As a member of the Moneyweek team explains in this video,  ETFs are rebalanced at the end of each trading day, which can cause the performance of your portfolio to quickly deviate from the index it is meant to be tracking if you are not paying enough attention. To avoid this issue from cropping up, beware of buying short or leveraged ETFs unless you understand the market beyond an intermediate level. Additionally, there are two types of what are known as Synthetic ETFs that you should absolutely not invest in unless you are an expert. Synthetic Stock ETFs are ETFs in which only some of the shares in a given index are purchased, not all, thereby rendering the EFT useless in tracking the movement of the original index. The second kind of Synthetic ETF to avoid is a Synthetic Commodity ETF, which does not buy any of the physical commodity in question (like gold bars), and, instead, tracks the price of that commodity by investing in future options that may never materialize. If you are just breaking into the world of Exchange Traded Funds and hoping to go it alone, it is best to stick with the basics and avoid these more complex ETFs.

Fundamentally, while there are dangers associated with every kind of investment, ETFs can provide you with a relatively safe, risk-free way to reap returns from stock markets all over the world. If you are looking to transition into retirement by dialing back on your stock maintenance, you should speak to your financial advisor about how ETFs can help give you the peace of mind you deserve as you move into this exciting new chapter of your life.

This post was originally published on

What Are Fixed Hybrid Annuities?

What Are Fixed Hybrid Annuities?

For many retirees, the term “fixed hybrid annuities” is not yet a household term. Hybrid annuities have received more mentions in the press lately, but touching on what they are — and what they can do — is still largely a mystery for potential investors.

Hybrid annuities are a retirement pension plan like option that allows buyers to earmark funds to fixed and variable annuity units. Most of these hybrid annuities give the investor the ability to choose the amount of allocation funds to the more conservative, fixed return investments, and how much to allocate towards higher risk annuity investments. This offers a lower but assured rate of return, and the potential for for higher returns.

According to Investopedia, “[…] Hybrid annuities can be useful for those who have longer time horizons and wish to participate in the stock and bond markets.”

In the last few years, especially since the mid to late 2000s (The Great Recession), retirement portfolios had shown lagging returns, so the prospect of a different approach has become more popular in the following years. Goldstone Financial Group has been one of the vanguards leading the charge in trying different ways to improve positive cash flow into the hands of the investor in this low risk and immediate annuity class. The latter is an annuity built on the premise that there is a need to create lifetime income that still allows access to the initial investment or principle. This allows for freedom that is attractive for most investors wanting the freedom of having access to their income stream.  

Before the 2008 economic downturn, many financial investments in the market were showing stagnation, low returns and little movement. For 60 years up to this point, the fixed hybrid annuities were untried, but since then, investors are more open to trying to break the same old, tried and over-tried methods. In an earlier post, we reported that it is the fear of losing that have caused financial advisors to stay the course — which stopped working:

The concept of being “well diversified” in today’s market is completely different than it was back then.  Being exposed to uncorrelated and low correlated asset classes is a great start, but at Goldstone Financial Group we have learned that you have to position clients to be even more prepared. Then it becomes a matter not of living in fear of an economic downturn, but rather of being prepared for one.

With 78 million baby boomers heading into retirement, a lot of people are wondering how they will comfortably retire in a volatile market. At Goldstone Financial, principals and co-owners Michael and Anthony Pellegrino approach this through a combination of strategies that many investment advisors either don’t have the experience to employ, or don’t feel their clients will respond well to.

Fixed hybrid annuities’ popularity has become the fastest growing annuity in the past few years with its income stream, minimal risk and growth being a no brainer for today’s market. Though a financial article on fixed hybrid annuities will not answer all your questions, making investors aware of their benefits should be enough for you to ask your financial advisor: What are fixed hybrid annuities? It will be soon enough before they become a household term.


3 Ways To Evaluate Your Appetite for Financial Risk

3 Ways To Evaluate Your Appetite for Financial Risk

A person’s appetite for financial risk—in other words how conservative or aggressive they are—is generally thought to correlate with the amount of return they have when investing. Of course, more risk doesn’t always mean more reward. In fact, the more effective application of risk appetite is in understanding your personal risk tolerance and how that should apply to your investment strategy—not the other way around. Understanding your appetite for risk is an important factor in making decisions about your portfolio, especially during times of change and volatility in the market.

There are many different approaches to assessing your appetite for risk, all which vary significantly from person-to-person. However, there are three factors that should be considered across the board:

Time Horizon: This metric looks at the amount of time your money will be invested. The shorter your horizon, the less likely the market has time to correct itself to allow you to recoup any potential losses. That means that for shorter-term commitments—for example, in the event that an investor is looking to withdraw the money for a large purchase in the near future—it’s generally smarter to go with more conservative investment strategies. A longer time horizon, on the other hand, is conducive to riskier or more aggressive investment strategies, because the market can go through multiple fluctuations before that money needs to be accessed.

Amount you have to risk: This is directly related to a person’s risk tolerance. Essentially, the more money you can afford to lose or, at the very least, tie up for a significant period of time, the higher your risk tolerance. It’s important to consider this in advance so that you avoid getting into a situation in which you have to sell off any stocks or investments, and get forced out of a position too early in order to have access to liquid funds.

The goal of the investment: What are your goals for your investments? This is a simple question that often gets overlooked. For many the goal is not to “beat the market” or raise as much money as possible. Some investors have a specific target in mind that correlates with a life goal, and targeting a specific return is often much more effective than trying to make the most money possible. Once you understand this, you may be better able to structure your investments with this knowledge in mind.

Of course, investors should also determine their personal comfort level with investing, as unrelated to the more tangible parameters of the time horizon and amount they have to risk. Even those with a relatively long time horizon and a significant amount to invest may find that they’re more comfortable doing so conservatively. In these instances, it becomes important to listen to your intuition because your relationship with your money is intensely personal. In considering your personal comfort, consider what keeps you up at night, and what you like or don’t like about your current financial situation. A proper assessment of your appetite for risk should take into account these very important factors, which are often a little more difficult to pin point.

As such, a good financial advisor or wealth manager will want a comprehensive account of your past investment experiences—what types of accounts you’ve held and what types of investing you’ve done. Your previous behaviors in these situations will help advisors work in partnership with you to determine the best approach moving forward.  For example, many investors who are of retirement age are looking for conservative investment strategies based on their shorter time horizon, so they focus on more conservative strategies like fixed hybrid annuities and moderately positioned securities. A younger investor with a longer time horizon and greater income, may invest more aggressively—again, dependent on his or her goals and appetite for risk.

If you want to know more about your own appetite for risk, there are plenty of resources that can provide more insight into this area, such as, this Investment Risk Tolerance Quiz developed by Rutgers University, or another assessment developed by CNBC’s Money Control. However, the best approach is probably to work with a professional advisor or investment expert who can evaluate your appetite for risk in conjunction with an extensive understanding of the industry and market.

No matter what your risk appetite, the world of financial investing has changed a good deal over the last decade. This changes people’s relationship to money and as advisors we have to be cognizant of that, because it is ultimately what controls investors’ comfort level and their perception of their own success. A crucial piece of this involves understanding each client’s appetite for risk.

This post was originally published on 

About Goldstone Financial Group

About Goldstone Financial Group

At Goldstone Financial Group, we believe that your financial future is far too important to leave to chance. We view it as our responsibility to thoroughly understand your goals and dreams so that we can leverage our experience and expertise to help you realize them. Rather than approach your finances with an outdated, transactional approach focused on particular products, we serve as your comprehensive financial solutions provider, forging a deeper relationship and creating a plan that can be adjusted as needed to help you reach your unique personal goals.

We are committed to remaining by your side as partners in achieving the results you desire. We provide financial plans targeted at earning consistent, reliable returns in all market environments, regardless of fluctuations and uncertainties.

Latest Tweets