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Are Reverse Mortgages A Viable Option for Saving Damaged Stock Portfolios?

The stock market has been in one of the most volatile states as of late. With sudden drops and slow increases, there are plenty of stock portfolios that are suffering. However, a recent report explores the possibility of reverse mortgages coming to the rescue.

“'A reverse mortgage helps preserve a portfolio and gives it a chance to recover,' Wade Pfau, professor at the American College of Financial Services, said at the 2018 Housing Wealth in Retirement Symposium in Washington, according to a Forbes report," stated a recent Reverse Mortgage Daily article.

According to the report, experts believe that HECMs are great tools when it comes to providing stability in retirement. With the growing concern over the seesaw effect that the market is going through, reverse mortgages could be considered as a stronger option for retirees.

"Forbes contributor Ted Knutson laid out the hypothetical example of a retiree who needs $3,000 per month from her portfolio to cover expenses for a year," according to RMD.

"If her index fund had a value of $250 per share, she’d have to sell 144 shares to recover that amount — or 180 shares if the stock market causes the fund to dip 25%."

Though, there are still some experts who do not believe in HECMs as a complete fix due to the costs and fees that could counteract much of the benefits.

To learn more about HECMs as an alternative option to stock portfolios, click on the image above.

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