What is a good investment for these strange financial times?Another thought provoking article by Ernie McDaniel - as seen in Forum News. |
 |
I will share the product name in a moment, but first let's talk briefly about “this strange time”. This is a time when the popular media and the majority of investors are optimistic about the stock market while respected (and wealthy) gurus Warren Buffet, Sir John Templeton, Richard Russell, Jeremy Grantham and others are very much the opposite to optimistic.
I too have an opinion about the market. Whenever someone asks, as they often do, which way I believe the stock market will go, my stock (forgive the pun) answer is “up and down”. That usually brings a chuckle, but I mean it seriously.
The real issue, of course, is not whether the market will go up-or down-it is when. And about that nobody knows; not the real gurus such as those I have named; not the media gurus to which most people are regularly exposed and whom I will kindly leave nameless.
Getting back to our goal of stress-relief from the bouncing, jouncing, rollercoaster, up and down of the stock market, here is the product you should investigate: the equity indexed annuity.
The equity indexed annuity is not a security. In fact, it offers contractual guarantees backed by the full faith and credit of the annuity company (not the FDIC). As I say, it is not a security; nevertheless, it does calculate returns based on the movements of the stock market.
If the market goes up enough, the equity indexed annuity goes up with it-but not as far. If the market goes down during the period of calculation, the value of the equity indexed annuity does not go down.
Sounds too good to be true, I know, but it works. The concept makes more sense if you consider that you sacrifice some potential return in the good years of the stock market in order to avoid sacrificing your accumulated growth, and preserve principal too, during the bad years. The equity indexed annuity is for people with both a healthy greed and an equally healthy fear of loss.
There is no product that serves every person and no product that serves any person's every need. In this strange time though, with gurus giving opposite advice and even the trustworthiness of previously revered financial institutions being questioned, a product that does its job of preserving and building retirement money - without you or me or any guru having to guess right - could be a good deal.
I have a client who calls the equity indexed annuity portion of his portfolio his investment “cruise control”. Another calls the equity indexed annuity his “market recovery program”.
Still another client calls the equity indexed annuity his “I don't know and I don't care” investment. When someone asks him what he expects the stock market to do, his answer is, you guessed it, “I don't know and I don't care”. He's found what for him is a perfect strategy for the “up and down” market that I (and anybody) can so confidently predict for the future. Sounds like stress relief to me.
Is the equity indexed annuity your cure for investment related stress? Could be just what the doctor ordered.
 |
 |
 |
|
| Get this file in PDF format by clicking on the icon below. You will need Adobe Acrobat Reader. Click here for more information. |
|
|
 |