It’s been said that martial arts are less about fighting and killing and more about improving your wisdom and intelligence. Like the line from the Kung Fu Panda: There is no secret ingredient. It’s just you.
If you apply this philosophy to your investing decisions, then you’ll notice that the relationship between Yin and Yang is a lot like the relationship between growth and safety. Both are necessary, and harmony can only be achieved by seeking a balance of both.
Investors who remember the pain of 2008 and fled to safety might be wondering if they’re missing the party during this time of market growth. We’re seeing historically low rates of returns for traditional safe money investments. According to Bankrate, the average interest rate for money market accounts dropped from 0.52 percent to 0.26 percent in 2016. Pitiful. And even more depressing, one-year bank CDs are averaging 0.08 to 0.26 percent. Ouch again.
WHO IS THE MASTER OF YOUR DESTINY?
On the other hand, we have the brave investor who is trying to stay in the market by following advice such as the 4-percent rule. The rule suggests that as long as retirees withdraw 4 percent from their portfolios and adjust annually for inflation, then generally speaking they will not run out of money. Here again, however, things have changed. Experts such as Morningstar (the leading provider of independent investment research) have rewritten this rule to suggest you remove no more than 2.8 percent. How much money would you need to have in your account if all you could withdraw was 2.8 percent a year?
In hopes of making up the difference, some people bet on an improving market over time. So what are your chances of success? In the 2015 Dalbar Report which analyzes investor behavior, the average equity mutual fund investor was found to underperform the S&P 500 by a margin of 3.66 percent. They tend to sell low and buy high due to investor emotions, but when your income is on the line, how can you NOT be emotional? We’ve entered into a global economy where world news travels with the push of a button, and it doesn’t even have to be true in order for it to affect market performance.
AWAKEN YOUR INNER QI
Qi, pronounced chee, means breath or air and it is considered by kung fu masters to be the basis for life and a vital energy that is constantly changing form. Your life and investment needs are also changing as is the world at large. What worked for you five years ago might not work for you today, and so breathing new life into your lazy money might help your accounts to make a comeback.
Guaranteed products like fixed annuities and lifetime-income annuities can do more than just give you a guaranteed paycheck for life, they can grow your money tax-deferred at a balanced rate and provide a tax-free death benefit for your loved ones. For people who don’t need to use their lazy money for income, an indexed annuity can give you a “playcheck” to do something fun with, or it can be used to increase or fund your legacy.
Achieving the growth you need during today’s longer retirement has gotten harder than it ever used to be what with higher market volatility and lower interest rates on guaranteed products. The indexed annuity has risen to the challenge by giving investors a way to stay in the market without getting bullied around. To find out if there might be an indexed vehicle out there that can help breathe new life into your lazy money, give us a call at (888) 440-2468 or fill out this online form. We look forward to seeing if can help you.