What are “headwinds” and “tailwinds” in financial investments?
"The term ""tailwinds"" describes some condition or situation that will help move growth higher. For example, falling gas prices will help a delivery company be more profitable. Lower gas prices is said to be a tailwind for the freight services industry. ""Headwinds"" are just the opposite. Its a situation what will make growth more difficult. For example, if the price of beef goes much higher, McDonald's is facing headwinds. It's a nautical term. If the wind is at your back (tailwind), that will help you move forward more quickly. If you are moving into a headwind, that will only make progress more difficult." Headwinds in an economic situation represent events or conditions e.g. a credit crisis, rising costs, natural disasters, etc, that slow down the growth of an economy. So headwinds are negative. Tailwinds are the opposite and help to increase growth of an economy.
"Most financial ""advisors"" are actually financial-product salesmen.  Their job is to sweet-talk you into parting with as much money as possible - either in management fees, or in commissions (kickbacks) on high-fee investment products** (which come from fees charged to you, inside the investment.)  This is a scrappy, cutthroat business for the salesmen themselves.  Realistically that is how they feed their family, and I empathize, but I can't afford to buy their product.  I wish they would sell something else. These people prey on people's financial lack of knowledge.  For instance, you put too much importance on ""returns"".  Why?  because the salesman told you that's important.  It's not.  The market goes up and down, that's normal.  The question is how much of your investment is being consumed by fees.  How do you tell that (and generally if you're invested well)?  You compare your money's performance to an index that's relevant to you.  You've heard of  the S&P 500, that's an index, relevant to US investors.  Take 2015. The S&P 500 was $2058.20 on January 2, 2015.  It was $2043.94 on December 31, 2015.  So it was flat;  it dropped 0.7%. If your US investments dropped 0.7%, you broke even.  If you made less, that was lost to the expenses within the investment, or the investment performing worse than the S&P 500 index.  I lost 0.8% in 2015, the extra 0.1% being expenses of the investment. Try 2013: S&P 500 was $1402.43 on December 28, 2012 and $1841.10 on Dec. 27, 2013. That's 31.2% growth.  That's amazing, but it also means 31.2% is holding even with the market.  If your salesman proudly announced that you made 18%... problem! All this to say: when you say the investments performed ""poorly"", don't go by absolute numbers. Find a suitable index and compare to the index.  A lot of markets were down in 2015-16, and that is not your investment's fault.  You want to know if were down compared to your index.   Because that reflects either a lousy funds manager, or high fees.   This may leave you wondering ""where can I invest that is safe and has sensible fees?  I don't know your market, but here we have ""discount brokers"" which allow self-selection of investments, charge no custodial fees, and simply charge by the trade (commonly $10).  Many mutual funds and ETFs are ""index funds"" with very low annual fees, 0.20% (1 in 500) or even less.    How do you pick investments? Look at any of numerous books, starting with John Bogle's classic ""Common Sense on Mutual Funds"" book which is the seminal work on the value of keeping fees low.  If you need the cool, confident professional to hand-hold you through the process, a fee-only advisor is a true financial advisor who actually acts in your best interest.  They honestly recommend what's best for you. But beware: many commission-driven salespeople pretend to be fee-only advisors.  The good advisor will be happy to advise investment types, and let you pick the brand (Fidelity vs Vanguard) and buy it in your own discount brokerage account with a password you don't share. Frankly, finance is not that hard.  But it's made hard by impossibly complex products that don't need to exist, and are designed to confuse people to conceal hidden fees.  Avoid those products.  You just don't need them.  Now, you really need to take a harder look at what this investment is. Like I say, they make these things unnecessarily complex specifically to make them confusing, and I am confused.  Although it doesn't seem like much of a question to me.  1.5% a quarter is 6% a year or 60% in 10 years (to ignore compounding). If the market grows 6% a year on average so growth just pays the fees, they will consume 60% of the $220,000, or $132,000.  As far as the $60,000, for that kind of money it's definitely worth talking to a good lawyer because it sounds like they misrepresented something to get your friend to sign up in the first place.  Put some legal pressure on them, that $60k penalty might get a lot smaller.   ** For instance they'll recommend JAMCX, which has a 5.25% buy-in fee (front-end load) and a 1.23% per year fee (expense ratio). Compare to VIMSX with zero load and a 0.20% fee.  That front-end load is kicked back to your broker as commission, so he literally can't recommend VIMSX - there's no commission! His company would, and should, fire him for doing so." The amount of money you have should be enough for you to live a safe but somewhat restricted life if you never worked again - but it could set you up for just about any sort of financial goal (short of island buying) if you do just about any amount of work. The basic math for some financial rules of thumb to keep in mind: If your money is invested in very low-risk ways, such as a money market fund, you might earn, say, 3% in interest every year. That's $36k. But, if you withdraw that $36k every year, then every year you have the same principal amount invested. And a dollar tomorrow can't buy as much as a dollar today, because of inflation. If we assume for simplicity that inflation is 1% every year, then you need to contribute an additional $12k to your principal balance every year, just so that it has the same buying power next year. This leaves you with a net $24k of interest income that you can freely spend every year, for the rest of your life, without ever touching your principal balance. If your money is invested more broadly, including equity investments [stocks], you might earn, say, 7% every year. Some years you might lose money on your investments, and would need to draw down your principal balance to pay your bills. Some years you might do quite well - but would need to remain conservative and not withdraw your 'excess' earnings every year, because you will need that 'excess' to make up for the bad years. This would leave you with about $74k of income every year before inflation, and about $62k after inflation. But, you would be taking on more risk by doing this. If you work enough to pay your daily bills, and leave your investments alone to earn 7% on average annually, then in just 10 years your money would have doubled to ~ $2.4 Million dollars. This assumes that you never save another penny, and spend everything you make. It's a level of financial security that means you could retire at a drop of the hat. And if don't start working for 20 years [which you might need to do if you spend in excess of your means and your money dries up], then the same will not be true - starting work at 45 with no savings would put you at a much greater disadvantage for financial security. Every year that you work enough to pay your bills before 'retirement' could increase your nest egg by 7% [though again, there is risk here], but only if you do it now, while you have a nest egg to invest. Now in terms of what you should do with that money, you need to ask yourself: what are your financial goals? You should think about this long and hard (and renew that discussion with yourself periodically, as your goals will change over time). You say university isn't an option - but what other ways might you want to 'invest in yourself'? Would you want to go on 'sabbatical'-type learning trips? Take a trade or learn a skill? Start a business? Do you want to live in the same place for 30 years [and thus maybe you should lock-down your housing costs by buying a house] or do you want to travel around the world, never staying in the same place twice [in which case you will need to figure out how to live cheaply and flexibly, without signing unnecessary leases]. If you want to live in the middle of nowhere eating ramen noodles and watching tv, you could do that without lifting a finger ever again. But every other financial goal you might have should be factored into your budget and work plan. And because you do have such a large degree of financial security, you have a lot of options that could be very appealing - every low paying but desirable/hard-to-get job is open to you. You can pursue your interests, even if they barely pay minimum wage, and doing so may help you ease into your new life easier than simply retiring at such a young age [when most of your peers will be heavy into their careers]. So, that is my strongest piece of advice - work now, while you're young and have motivation, so that you can dial back later. This will be much easier than the other way around. As for where you should invest your money in, look on this site for investing questions, and ultimately with that amount of money - I suggest you hire a paid advisor, who works based on an hourly consultation fee, rather than a % management fee. They can give you much more directed advice than the internet (though you should learn it yourself as well, because that will give you the best piece of mind that you aren't being taken advantage of). &gt; The CEO of Canada’s largest grocery and drugstore chain has warned his shareholders that minimum wage hikes across Ontario and Alberta will cost his company an additional $190 million in expenses next year.  &gt; “We are flagging a significant set of financial headwinds and the organization is mobilizing all of its resources to see whether or not it can close that gap,” said Loblaws Companies Ltd., CEO Galen G. Weston earlier this week.   Is that really so bad of a quote?  He's saying it's something they need to be aware of and address...  I don't get the headline. You want CFP or CFA who is also a fiduciary, meaning that by law they have to put your interests ahead of their own. Financial planners who are not fiduciaries can, and often do, recommend investment vehicles that earn them the most commission with little regard of your financial goals. If you already have $500,000 to invest and racking up $100,000 a month you probably qualify for most institutions private client programs. That means that the firm/advisor will look at your financial situation and come up with a custom-tailored investment plan for you which should also include tax planning. I would start with whatever financial institutions you already work with - Schwab, your bank etc. Set up a meeting and see what they have to offer. Make sure you interrogate them about their fees, their licenses/certifications and above all if they are a fiduciary. "I recommend you take a look at this lecture (really, the whole series is enlightening), from Swenson. He identifies 3 sources of returns: diversification, timing and selection. He appears to discard timing and selection as impossible. A student kinda calls him out on this. Diversification reduces risk, not increase returns. It turns out they did time the market, by shorting .com's before the bubble, and real estate just before the downturn. In 1990, Yale started a ""Absolute Return"" unit and allocated like 15 percent to it, mostly by selling US equities, that specializes in these sorts of hedging moves. As for why you might employ managers for specific areas, consider that the expense ratio Wall Street charges you or me still represent a very nice salary when applied to the billions in Yale's portfolio. So they hire internally to reduce expenses, and I'm sure they're kept busy. They also need people to sell off assets to maintain ratios, and figuring out which ones to sell might take specialized knowledge. Finally, in some areas, you functionally cannot invest without management. For example, Yale has a substantial allocation in private equity, and by definition that doesn't trade on the open market. The other thing you should consider is that for all its diversification, Yale lost 25 percent of their portfolio in 2009. For a technique that's supposed to reduce volatility, they seem to have a large range of returns over the past five years." ES1 is the Bloomberg symbol for the CME E-mini S&P 500 front-month continuous contract.  ES2, ES3, etc. will likewise yield the 2nd and 3rd months.  Which exact futures contract this symbol refers to will change about once a month. "Thanks.  This is super simplified as I said.  It gets much deeper when you start looking at costs of capital, country risk premiums (for projects in emerging markets), ""risk free rate of return"" (putting cash in guaranteed returns such as a us treasury note), mutually exclusive projects, etc.  But the basic concept is... what is the minimum required return on a project to justify choosing to pursue it.  If you borrow money via loan at 10%, your required rate of return on whatever project you invest it in has to be at least that 10%.  Otherwise you're better off just not doing anything." "It is called ""Opportunity Cost.""   Opportunity cost is the value you lose because of a decision you made.   This is the book definition from Investopedia. The difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond yielding 6%. In this situation, your opportunity costs are 4% (6% - 2%)."