If you’ve been investing for any length of time, you may have been conditioned to believe that risk is just another part of the overall financial “game.” But if you really want your money to grow, why would you put any of it directly in harm’s way?
The stock market can take some pretty substantial swings, both up and down. In fact, just since 1990, the S&P 500 Index returns have been as high as 35% in a given year, but they’ve also been as low as 48%.
If you run some simple calculations, you can also see that the more value your investments fall in value, the higher the subsequent gains must be in order to just get back to even.
|% Loss||% of Gain Required to Recoup Loss|
Unfortunately, while nobody likes to lose value in their portfolio, this can be particularly difficult if you’re approaching your retirement years. That’s because you may not have time to wait for your portfolio to rebound.
So, what can you do to make sure that your money has the opportunity to grow, while at the same time keeping it from being decimated in the next market correction?
One option is to purchase a fixed indexed annuity.
With a fixed indexed annuity, your return is based in part on an underlying market index, such as the S&P 500 – usually up to a certain stated cap. But, if the underlying index is negative during a certain period of time (or term), your account value won’t suffer a loss. Rather, it will simply be credited with a 0%.
Because fixed indexed annuities can allow you to both grow and protect your money, they’re often said to offer the best of both worlds. That being said, though, these financial vehicles are not right for everyone.
In addition, there are many different types of fixed indexed annuities to choose from – and depending on the product and the insurance carrier that offers it, you’ll discover that there are different indexes being tracked, different fixed rate options, and different riders that may be added.
So, depending on your specific goals, risk tolerance, and time frame to retirement, it is best to chat with an annuity specialist in order to determine whether or not a fixed indexed annuity is a good solution for you.
At Annuity Gator, we specialize in educating consumers on how annuities work, and how to wade through the myriad of “small print” that you will oftentimes find associated with these products.
We can also compare different annuities – including annuities that you may already own – so that you can anticipate how they may perform going forward. If you’re ready to add more certainty to your retirement portfolio, while at the same time still holding on to the opportunity to grow your savings, let’s talk and work together to find the right financial tool for you.