Before you commit money to anything, you should be able to say what the upside is and what the worst case looks like. Most people can’t, because nobody made them ask. We start there, and we build the plan around the answers.
Risk is managed, never eliminated.
That is the question you are actually asking, about a fund, a contract, a strategy, a decision. It has no honest answer until two others are answered first. Most of the industry skips them.
What does this do for you if things go well, and where does that return actually come from? Growth is the whole reason to invest. Avoiding every risk is its own way of running out of money.
Not a bad year — the bad one. And is that worst case written into a contract, or is it only what somebody expects? Those are very different things, and the difference is usually in the paperwork.
Some losses are setbacks and some are permanent. If the worst case would end the things that matter most, the upside is irrelevant. If it would not, the risk may well be worth taking.
The Stormathrive Investment Method holds most of the portfolio in short-duration, high-quality fixed income and cash equivalents, and commits a limited portion to long-dated options on an equity index. Here is what that means, stated separately rather than summarised.
| Capital committed to options | A limited portion of the portfolio. The firm generally holds combined options exposure to no more than approximately 20% of the strategy's assets. |
|---|---|
| Reserve | The remainder, in short-duration, high-quality fixed income and cash equivalents, providing stability, a baseline yield, and collateral where needed. |
| Market exposure | Long-dated index options give exposure to the index that is larger than the premium paid for them. That is leverage, and it amplifies movement in both directions. |
| Liquidity | Positions are held at a qualified custodian and can be sold on any business day. There is no surrender period and no exit charge. |
| Maximum loss per position | Defined by the contract. On a long option it is the premium paid; on a short put spread it is the distance between strikes less the premium received. |
| Floor under the portfolio | None. The firm sets internal risk targets, but they are targets, not guarantees, and actual results may differ. |
Proportions shown are structural, not a projection, and reflect the limits described in our Form ADV Part 2A. Options and derivatives carry material risks and are suitable only for clients who understand and can bear them. Options may expire worthless, in which case the entire premium paid is lost. Investing involves risk, including loss of principal.
An investment decision changes a tax outcome. A tax outcome changes what income is available. Income changes what insurance is for. We work across the whole picture rather than one corner of it.
What you will draw, from where, and in what order.
How the portfolio is built and what it is built to survive.
What each decision costs after tax, not before it.
Which risks are worth carrying and which belong elsewhere.
What has to work before anything else can.
What is left, to whom, and what they inherit with it.
Twelve questions you should be able to answer about whatever you own — a fixed indexed annuity, a variable annuity, index funds, or an options-based strategy like ours. No score, no ranking, nothing recommended. You leave with a printable list of the ones you could not answer.
Free. No email required to use it or to keep your result.
Open the toolKevin founded Stormathrive Wealth Management and serves as its principal and chief compliance officer. He is a CERTIFIED FINANCIAL PLANNER™ professional with over 20 years of experience in financial planning, insurance and investment management. You work with him directly, from the first conversation.
CFP Board's Code of Ethics and Standards of Conduct requires a CFP® professional to act as a fiduciary at all times when providing financial advice. Kevin is also a licensed independent insurance agent and owns Decision Tree Insurance LLC; when a client buys insurance or an annuity through him or that entity, a commission may be paid. That conflict is described in our Form ADV Part 2A, Item 10.
Tell us what matters to you. We will tell you honestly whether and how we can help, and if we are not the right fit we will say so.
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