Is your retirement account acting like a YoYo?
With the nightly news comes the report on the day’s happenings in our national stock markets. Every day brings what has happened to America’s investments. The movement in the market affects more than 50% of America’s retirement funds.
Some days it increases, and some days it decreases. Many “experts” will sell you on the idea that their advice can help you avoid the pitfalls of a downturn. In reality, all of these experts are guessing. Some of them are well trained and well-rehearsed with massive piles of research, but the fact remains, the market is and always will be volatile. That, of course, is one of the great benefits of our free American market.
Just suppose for a moment that you had a direct play in the market, let’s pretend that you have the ability only to invest in assets that increase and never participate in a down market, would that be great or what? We could think of a solid marketing name for our system, one that would attract many looking for a safer method of investing hard-earned money. We could call it:
Gain or Retain.
Gain or Retain in reality is an actual investment option available to you and others. How would you like to have the option of only gaining and never losing money? It’s not every day that you find the opportunity for potential growth with actual safety in the same financial vehicle.
Generally, investors are provided one of two choices, either they give up the security in exchange for a more significant potential for growth or they accept less growth in exchange for a higher level of safety.
Thanks to innovation in the insurance industry, you can have potentially high returns tied to the stock market and the security of a guarantee, the gain in returns with an annuity product is called Fixed Indexed Annuities. (FIA)
Fixed Indexed Annuities are solid choices for investors seeking safety in a low-interest rate period and a volatile financial market. They work like this, your return (or the amount credited) is based on a percentage of increase of a stock or equity index, such as the Standard and Poor’s Stock 500 Index or the Dow Jones Industrial Average If stocks grow, you could benefit, but if stocks fall, you retain your position. You only can do one of two things: Gain or Retain.
If you own an IRA, the IRS allows for these products to be used in retirement accounts. This safety of principal will guarantee you will never lose money, nor will your account ever be exposed to risk or loss.
Gain or Retain!
Insurance companies offer a broad range of products in this category and do not charge any fees. Instead, they limit the gross yield available to you. In this scenario, let’s pretend the actual returns of a stock index for a year were 8%, but the annuity had a cap of 4%, your return would be 4%, and no fee would be subtracted. Once again, if the market fell, you do not participate. You trade a portion of your yield for the promise of no exposure to market risk.
A dynamic feature found in Fixed Indexed Annuities is the annual Guarantee Reset. Each year, whatever gain you have enjoyed by the anniversary of the annuity is now fully locked in and becomes part of the guaranteed portion of your account. Assuming a deposit of $100,000 grows to $104,000 at the end of the first year, that is now your guaranteed minimum. Your funds can never be less than the annual reset guarantee.
Gain or Retain!
