[lotsofpulp]

> Big banks and investment funds certainty do it, one way or another

I do not know what you mean by this, but hedge funds hedging their positions is not “insurance”.

You cannot earn a return with no risk. If you want to de risk, the counter party is going to want commensurate payment to take on the risk plus a profit premium.

Just like you cannot profit off of auto insurance (unless you have inside knowledge of their premium pricing and can game it), you would not be able to profit off of “insuring” your investments, which would defeat the whole point of investing. At that point, just invest in less risky things, like bonds or cash.

Note that risk has a time component, so risk for an equity index fund for year 0 to 3 will be higher than a bond fund, but for years 20 to 30 it might be basically the same. So insuring yourself against risks for an investment in an equity index fund you do not need for 2+ decades is pointless.

[PaywallBuster]

good point hedging != insurance

this goes to my last point

> Technically, I'm guessing this would not be called "insurance" but a financial instrument or investment which buyers/investors would get benefits under certain conditions.

I would not expect to have this insurance for long periods of time

But could be interesting when it feels like we hit the peak of the market

[lotsofpulp]

If you are not going to have the insurance for long, then just skip the middleman and buy a bond index fund or treasuries yourself. There is no need for this type of insurance product to exist…since it already exists for cheaper.

[PaywallBuster]

They wont' go up in value to make up for your losses in the stock market?

[lotsofpulp]

I am not sure which securities you are referring to with “they”.

You only have a loss when you sell a security. So if you are interested in needing to be able to sell securities in the next 3 years, then invest it in a security that will not lose value in the next 3 years, such as bonds or FDIC insured accounts or cash. If you are not selling in the next 3 or 5 or 10 years, then historically, equities do not lose money that far in the future. The further out into the future, the lower the probability of loss.

So you “insure” yourself by making appropriate investments for the appropriate time horizon.

[PaywallBuster]

with the "official" inflation at 7% that may not be an option

and I'd be interested to compare performance of both approaches (probably you're right, anything else is too difficult or expensive for retail investors and doesn't give extra return)

thank you for the exchange so far