Friday, May 29, 2015

Better than the Bank - Part II




The stock market has been going up since 2011. It has risen by more than 40%.
It's a wonderful time to be in the market ... or is it?  

Do you know when the next stock market crash will happen?

You remember back in 2009 when the stock market decreased by more than 30%, or in 2001 when it dropped by nearly 50%.  Now here is the question: do you think you would have more money today, if you could have somehow avoided the stock market crashes?



You can't predict when the next stock market crash will take place,  but if I could show you an investment that increases when the stock market increased, and didn't lose money when the market declines. Would you be interested?  

When it comes to investing money, there's always a risk/reward trade-off,  or so we've been told.   If you want higher returns, you have to take bigger risks.  You've learned to put your safe money in the bank,  but it doesn't earn much.

If you want better returns then you have to put money into the stock market.  You can buy individual stocks,  or mutual funds. You learn about things like diversification and asset allocation as ways to control risk. Yet, with all these strategies, are you impressed when you look at your account balance?

There is another place to put your money.  You can invest with insurance companies.  Insurance companies are financial institutions,  and they issue interest bearing accounts called annuities.  Banks issue CDs.  Insurance Companies issue Annuities, but insurance companies can pay more interest than banks,  and they're safer than the stock market.  

Insurance companies issue two types or annuities: fixed rate and variable rate annuities.   Today I want to talk about a variable rate annuity where the interest paid,  is tied to the performance of the S & P 500 Index.

The S & P 500 Index is the barometer used to measures the stock market.  The S & P 500 Index is made up of the 500 largest companies in the U.S.  You hear them talk  on the news about the S & P everyday.

Now what I love about this investment is you earn 75% of the S & P 500 when it is positive,  and when it is negative you lose nothing, zero.  When I was in Algebra, I learned "0" is not a negative number, so you can't go backwards.  It is important not to go backwards.  

So let me ask the question again:  do you think you would have more money today if you could have somehow avoided the stock market crashes.  Please review this chart which shows how much more money you'd have, if you started investing in the year 2000. (blue vs red).


This is what happens if you don't go backwards.

Do you save for your retirement? Have CD's that are ready to mature;  or an IRA or a 401K to rollover.  We offer programs for as little as $50/month.   

So if I could show you an investment that increased when the stock market increased, but didn't lose money if the stock market declines - would you be interested? 


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