Recent significant stock market declines and portfolio volatility have many investors inquiring, once again, about the safety of annuity accounts. Consumers ask, “Are annuities safe from a recession? Do they maintain value when the market goes down? Will they lock in my gains each year?” The answer is, yes. Investing in a fixed, an immediate, or an indexed annuity policy will protect your investment from market losses.
Should You Wait Out Another Correction?
Unfortunately, many investors are suffering through similar pains to those experienced during the market slide from 1999 to 2003. Most (not all) brokerage accounts regained their losses from that period of time, but this recent downturn has quickly undone that progress. It is business as usual from the brokers, however. They simply tell their clients to wait it out. Yet, these same brokerage houses are busy selling stocks, trying to lock in profits while their individual clients absorb the losses.
What does History Tell Us?
For many years the brokerage industry has shunned the safety of fixed annuity accounts while individual investor portfolios decline. If you look at a historical chart of the S&P 500 (a leading stock market barometer) it peaked in March of 2000 at approximately 1,500. In October of 2007, the S&P 500 appears to have peaked again at nearly 1,500. Backing out any potential dividend gains, that is a flat rate of return for over 7 ½ years! The current value of S&P 500 (1,300 as of March 2008) shows a loss of nearly 12%. The outdated advice of buy and hold does not appear to be working. In order to create wealth, investment portfolios need to lock in gains from time to time. An indexed annuity will lock in gains each year and protect the principal and interest gained in the account.
It begs the question, why should mom and pop investors participate in this turmoil again? Do they experience a higher standard of living when the market increases? Usually not, but they certainly feel the financial pain when the market contracts by ten or twenty percent. Maybe younger investors can weather this storm again, but there are those who cannot afford to experience significant losses. Many senior investors are in retirement and counting on their nest egg to produce regular income. Or maybe they are near retirement and trying to decide how to best protect their IRA’s, 401(k) or 403(b) accounts for future income.
Is an Annuity the Answer?
Annuity accounts are very beneficial for investors who need reliable growth, guaranteed income, and protection of their principal. Maybe the brokerage industry is winning the battle in the media, but annuity investors have been winning battle of asset preservation for the last ten years. Annuity owners have been protecting their principal and interest while experiencing above average returns on their investment dollars.
You might ask yourself, “Have I not investigated annuity accounts because of what I know, or what I think I know.” If you are not sure, it may be worth learning more. A fixed or indexed annuity account can be a valuable alternative to a volatile brokerage account.
Learn more about the benefits of fixed indexed annuity accounts
A.M. Hyers has been working in the insurance and investment industry for over ten years. He owns and operates Hyers and Associates, Inc. an independent insurance agency doing business in Georgia, Illinois, Indiana, Missouri, and Ohio.
His agency offers insurance products in the individual, family, and small business group marketplace. They use the leading national insurance carriers to quote health insurance, health savings accounts, dental, and vision plans.
Other lines of insurance offered include life insurance, disability insurance, and long term care insurance. They use several carriers to quote Medicare supplement plans and Medicare Part D coverage for seniors. Additionally, the independent agents of Hyers and Associates Inc. offer fixed, indexed, and immediate annuity policies for individual and group retirement plans.
sam detto,
ottobre 31, 2008 @ 1:07 pm
thanks about this infos