Jim Feit is a freelance writer in the greater Palm Beach area. He may be reached at (561) 734-5510 Updated
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An Education on Equity-Index Annuities Related Articles Page 5
How Can We Avoid the Investing Mistakes of Our Recent Past?
By Jim Feit,
Your Friend and Neighbor
Whether or not you're retired, you undoubtedly came to Florida to enjoy its beauty and warmth, share a more active social life with newfound friends, and avoid problems, worries, and aggravation if humanly possible! So why take any chance of upsetting your applecart by exposing your hard-earned life savings to unwarranted risk?
There are some investment realities we all need to face: Stocks, mutual funds, variable annuities, even bonds all let us down hard in the last big market tumble. And to make things worse, interest rates dropped and remain suspended well below the percentages we used to rely on to provide us with solid earnings. The market's been teasing us for months up for a while - then down again - up-down, causing us to think: Oh, boy, maybe I'll be getting back my money soon! And making us wonder, Is this a good time to listen to my broker and put more money into the market?
Before you do that, there's a question you need to consider, and it's simply this: Can anyone seriously believe the market will not again take a major dive when we may least expect it and be ill prepared to cope with it ... especially in view of the huge mounting deficits being created by the immense needs of our nation's expanding population and never-ending threats to its peace and stability ... our inability to prevent more losses of life and property from disasters yet to be wrought by suicidal terrorists ... any event in fact that can and will cause investor confidence to deteriorate rapidly. But won't the market eventually come back up you might ask? Maybe so ... but who knows how long it will take after another big market downslide to make us whole again ... and how long can you and I afford to wait?
I'm not suggesting for a moment that we can or should avoid risk with any of our assets; however, I am cautioning against taking excessive risk by exposing too much of your money to unnecessary risk of loss.....especially when it's possible to achieve excellent earnings without taking that risk.
During the course of the last prolonged Bull market, there is a basic but important piece of knowledge we often were led to overlook. There is a difference a big difference between money that is invested and money that is saved. For seniors like us, understanding this difference is the key to achieving retirement security and peace of mind. Look at it this way:
The money we invest is our Red money ... money that takes on risk sometimes lots of risk. Normally we would put Red money into any or all of four risky alternatives Stocks, Bonds, Mutual Funds andVariable Annuities all associated with market risk of loss. Investments like these are made in the hope of making lots of money through gains in value but can instead cause us to lose our shirt!
Our Green money, on the other hand, is the money we save. Green money accepts no risk because it is the money we want to preserve for our future; therefore, we usually would allocate it to any or all of three safe alternatives Fixed Annuities, Bank Certificates of Deposit and U. S. Government Securities enabling us to avoid market risk of loss altogether.
The real key to achieving financial security as seniors is knowing how much of our total savings should be red and how much should be green how much we should invest and how much we should save. Getting those apportionments right is vital to your secure future. Millions of seniors are suffering right now because over the past decade, they didn't know the right proportions, or did know them but nevertheless allowed themselves to be caught up in the Bull Market Euphoria that prevailed for several years.
Here's a simple guideline to help you preserve the right amount of your money. Your age, expressed as a percentage, should represent your green savings dollars money that should not be subjected to risk. Thus, for example, if you are 65 years old, and your available funds total, perhaps, $300,000, then 65% of that amount $195,000 should be placed only in safe financial products that totally avoid market risk of loss.
Among the three safest alternatives for your savings, Fixed Annuities, Bank Certificates of Deposit and U. S. Government Securities, the only choice blessed with a major tax advantage by our Federal Government is the Fixed Annuity, which is tax-deferred. No tax is payable on its earnings unless and until you withdraw money from it. However, if you have been putting money into Bank CD's, then you've had to pay taxes on their sparse earnings every year, even when you leave those earnings deposited there without withdrawing them. Taxes like these can be a real thorn in your side by reducing your already low interest earnings even further.
Fixed annuities have another big advantage: their tax-deferred earnings, unlike earnings from virtually any other financial product, do not increase taxes on your social security payments by one cent! Note that even tax-free income from municipal bonds must be included by law when calculating what tax you'll pay on your social security.
There is only one type of Fixed Annuity where you can earn money based mainly on stock market performance, still keep your money completely safe from stock market risk, and be guaranteed a minimum rate of return on your money just in case the stock market does not perform in the way you expected.
In other words, this product lets you totally avoid market risk keep your green money safe from market downturns, no matter how severe or how long they last. This is because during any downslide you'd still be breaking even neither be losing nor earning one penny and keeping everything you'd earned in past years. And then, once the market starts to recover, you'd begin earning again much sooner than if you owned stocks or mutual funds simply because you would never have lost any money to begin with! Even now, if you own stocks and mutual funds, you're undoubtedly still waiting to get back a large portion of their big loss in value during the last market downslide. I'd be happy to explain to you how a product that Guarantees you'll never experience a market loss, combined with a feature known as annual reset can enable you to improve your earnings with safety and peace of mind.
The miraculous product I'm describing is called an Equity-Index Annuity. In my past 5 articles, I've tried to explain in detail the features of Equity-Index Annuities that are most desirable, and to expose those which are not. Yet, a number of my readers have advised me they would prefer to meet with me to be sure they understand all of these marvelous products&Mac226; important and worthwhile benefits. Please read those articles in this publication if you haven't already done so, and then call me to schedule a meeting.
There is no doubt in my mind that if carefully chosen among the large number available, the right Equity-Index Annuity with just the right features has the potential to do you a world of good financially. I feel it's my responsibility to help you simplify the process of identifying which of these features would best fit your individual needs, and to illustrate just why I feel some features are worthwhile for You while others are not. Of course there is always a remote possibility you may not find a product with features that suit you; but isn't it worth a few minutes of your time to find out?
You probably would like to know how the returns of Equity-Index Annuities over recent years have compared with the earnings of other alternatives you've been considering. You&Mac226;ll be surprised when you learn the facts! As always, you can reach me toll-free by phone 1-800-267-4933 or at (561) 734-5510 or send me an E-mail at JIMFEIT@aol.com to set up a meeting that's confidential and without cost or obligation.
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