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Stock Market Graph

Reducing Stock
Market Risk

We had lost decade from 1998 to 2008 where the S&P 500 generated a

–1.40% rate of return while incurring two huge stock market crashes (–46% (2000-2002) and –59% (2007-March 2009)).

More recently the stock market has had a very good “bull run” (average rate of return in excess of 13% from October 2009 to October 2018).

What does the future hold?  If anyone is being honest, they will tell they really have no idea.

Personal Investment Risk Score—do you know your personal investment risk score (a score on scale of 1-100 indicating your appetite for and capacity to take risk in the stock market)?

Are you working with an advisor who uses a personal risk score as a foundation tool to help give you advice? For most, the answer is NO and NO!

How Much Money Can You Afford To Lose to Market Volatility?

40%, 30%, 20%, 10%

Safe Money Tools

What is a safe money tool? It’s one that provides some amount of upside growth while providing 100% downside protection from stock market downturns. Sound interesting? Let’s look at two such tools.

Retirement Life™

  • Tax-free growth

  • Tax-free withdrawals (no age 59.5 limit)

  • Money can never go backwards due to downturns in the stock market

  • Gains are locked in annually

What’s the catch? There is a cap on the growth each year (caps range from 10-14.5).* For example, if the S&P 500 index generates  a return of 15% and if Retirement Life™ has a cap of 13%, the return on cash would be 13% not 15%.

 

The tax-free expected rate of return on cash in Retirement Life™ should be between 6.5% and 8.5%.**

Fixed Indexed Annuities (FIAs)

How would you like a wealth-building tool with the following traits?

  • Tax-deferred growth

  • Money can never go backwards due to downturns in the stock market

  • Gains are locked in annually

What’s the catch? There is a cap on the growth each year (caps right now are in the 7% range).* The tax-deferred rate of return in an FIA should be between 4-6% over time.**

FIAs can also come with a guaranteed income for life rider that will be a good fit for many who are worried about running out of money in retirement.  To learn about guaranteed income for life products, click here.

What’s the difference between Retirement Life™ and FIAs?

Retirement Life™ is a unique type of cash value life insurance policy and when designed properly it allows money to grow tax-free and come out tax-free.  FIAs are annuities and simply have tax-deferred growth. Retirement Life™ is for people typically under the age of 55 (because the costs over age 55 start to get price prohibitive). Due to the lower caps, FIAs are typically for people over the age of 50.

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