Everyone dreams about a way to make money during the good times and avoid losing it during the down years. Conservative and aggressive investors alike – nobody wants losses!
When markets are going up, it’s tempting to let it ride. It’s human nature to stay with a rising market, sometimes against our better judgment. When markets take a sudden turn for the worse, as they do, it can be difficult at that time to find impartial advice about what to do. People want the best of both worlds – to protect what they’ve got and to participate when markets are going up.
“In retirement, ROI means Reliability of Income, not Return on Investment. Use this guiding principle when making financial decisions to create guaranteed, lifetime income.
Here’s The Good news! You can take advantage of that type of strategy now because it currently exists. It’s not an investment which means there is no investment risk. Investments carry risk and while there is nothing inherently wrong with investment risk; it should not be the foundation of a retirement plan. We’ve all heard about “technical trading systems” promising to make people money in bull markets while magically keeping them safe in bear markets. Complicated and intimidating, they guarantee nothing. How can they possibly deliver all that on a steady basis?
What I’m talking about is as a Fixed Indexed Annuity. Thinking of them as market indexed annuities is helpful because their index performance is based on market performance.
It’s not new. During the 2008 Financial Crisis and during this Coronavirus bear market, not one of my clients lost a dollar in fixed indexed annuities. That is why my clients own indexed annuities. They are averse to market losses and they understand the impact of losses in retirement. There are millions of indexed annuities in retirement plans and none of them has lost a cent, either. NO LOSS OF PRINCIPAL, EVER! That is THE guarantee of an indexed annuity.
HOW CAN YOU DO THIS?
What about the upside? Fixed indexed annuities have been designed to modestly beat the performance of other fixed income products and they typically do. At times, they do much better. Those are times when the markets are doing better than usual too. For example, many of our clients earned as much as 14% from January, 2019 to January, 2020. Those were extraordinary returns because the market was experiencing extraordinary growth during that period. The upside potential of an indexed annuity is determined by the participation arrangement you select and the fund selections you make. It’s as simple as that and you’re protected by a contract, giving you an additional level of security. More about that when we speak.
Personally, I do not like to hype the upside of market indexed annuities. I cannot stress enough what the value of NO LOSSES means in retirement. We sell SECURITY, not securities.
Let no one with a financial interest in your assets dissuade you from making a financially sound and prudent decision, one that may be in your best interest. When you move money away from stock brokerage firms or wealth management firms, they’re losing significant, recurring revenue earned from your assets. I have no problem with disclosed fees for money managers but it should come as NO SURPRISE if they attempt to make you second guess your decision to move your money. To keep this simple, an annual fee of only 1.5% on $1,000,000 of assets is $15,000 per year, or $150,000 of your money over 10 years.
When markets tumble and the assets in your account go down, so too does the revenue of the investment firm and the investment manager. When you ask if you should sell or hold, can you trust the advice of an advisor who loses if you liquidate or move your assets? Is that structure in your best interest? Most investors are not aware of these details and many are surprised about the potential conflict.
Guaranteed, lifetime income. A market indexed annuity with an income rider, or possibly a single premium immediate annuity, is the best of both worlds. They provide income that will pay you for as long as you live. No loss of principal and guaranteed income for life is the perfect combination in retirement.
“With a market-indexed annuity, you pay no commission from your assets. Instead of paying “forever fees” that are directly reducing your assets each year, there are no annual fees*. The one-time commission is paid from the assets of the insurance company, never from your assets! The interest calculations, participation rates and all of the terms are stated in the contract that is regulated by the Department of Insurance in your state.”*Some people choose riders that may have annual, disclosed fees.
Market indexed annuities are only available from major insurance companies because insurance companies are financially strong enough to provide such guarantees. Indexed annuities are ideal for those of us who can’t stomach watching our retirement assets evaporate in a crash or during a bear market, only to hear an advisor tell you “not to panic” or “it always comes back, be patient”. That’s never easy to hear, but especially tough in or near retirement.
From 2000 to 2020, there have been three major bear markets and if you owned a market-indexed annuity, you avoided all three. That’s “peace of mind” – not a dollar of loss over 20 years.
The numbers don’t lie. As you can see in the chart below, the market-indexed annuity has performed nearly as well as the S&P 500 total return index (including dividends). WITH NO RISK!
My wife owns market-indexed annuities in her retirement plan and that is the best testimonial I could possibly offer. Market indexed annuities guarantee your principal – forever. If the market drops 30%, you lose nothing. If you want certainty and predictable outcomes without anxiety and sleepless nights, this is for you.
Are annuities safe? If you are a conservative to moderate investor, why not let a market-indexed annuity take all the guesswork out of your retirement planning? When the indexes are up, you make money. If markets crash or if volatility takes over like this year, you will not lose money. Keeping this simple, if you had put $500,000 in a market-indexed annuity in January or February of 2020, you still have $500,000 of principal today. Your principal is always intact — always at the highest level it has achieved! More about keeping ALL “stacked gains” when we speak.
This is the best of all possible worlds.
What’s the catch? To pay for the downside protection of never losing any principal, you won’t get 100% of the upside when the markets are up. For example, if you choose a 50% participation rate on the upside, it means you receive a 15% return when the S&P index rises by 30%. If the S&P is up 8%, you will see interest of 4% credited to your account.
Ken Fisher hates annuities. Why do some financial “experts” criticize annuities? Everytime a Ken Fisher client liquidates and moves money to an insurance company for the purchase of an annuity, Ken Fisher’s firm loses annual recurring revenue. Maybe that is why Ken Fisher and other wealth management firms hate annuities? Follow the money!
Instead, you might learn from the world’s leading economists and professors who are all in agreement about the value of annuities in retirement. Consider what they say because they have no axe to grind. When Olivia Mitchell from Stanford says that annuities are key assets to own in retirement, she is saying so because she’s done the research. When Professor Wade Pfau at The American College, Tom Hegna, David Babbel from Harvard or Roger Ibbotson from Yale write papers about the advantages of annuities, they can make those claims because they are among the leading retirement experts in the world.
Professor Pfau stresses that “investors typically fall into the “trap” of depending on investment portfolios as the chief way to fund their retirement. Now, many of these folks who are at retirement find themselves needing a life raft…Acquiring an annuity would have prevented such a dire scenario” he argues.
Which Is The Best Annuity For Me?
There are thousands of annuities in the market and it is our job to know which one suits you best. Once we know your goals and objectives, we can do the best possible job for you. Some contracts are too expensive and some carry hidden fees and charges. You want to make sure to buy the right indexed annuity from an experienced professional only representing insurance companies with great ratings.
Ready to start protecting your retirement assets and never losing money in the market again?
I suggest you contact Ted or Deborah Bernstein to answer all your questions. Time does matter. A low interest rate environment forces insurance companies to lower the rates for new clients. Safety is what drives their decisions in order to properly respond to lower interest rates, they will change their offers accordingly.
Why don’t you start the ball rolling and call us or fill out the simple contact form on this page or any page of the this site. We can be reached at 561-771-4647 or 561-869-4500