A crystal ball into the investing world – wouldn’t that be useful! Unfortunately, predicting market performance to-a-t is not exactly possible. When markets experience downs, it is important to ask yourself: What can I do to help protect my savings and ensure future gains?
This past December marked the worst decline for stocks since the financial crisis in 2008. Anxiety overcame many around this market uncertainty. While calm settled over the financial markets once the New Year hit, an uneasiness that 2019 may continue to be volatile still remains. The potential of another government shutdown, trade wars, and increased interest rates all contribute to this uncertainty.
When markets decline, financial portfolios ultimately go down in value. Get ahead of the curve by checking in on the risk tolerance of your financial portfolio and making sure to diversify accordingly.
Diversifying may be the most important part of retirement planning. While there is no one right answer – or guaranteed sure thing – having a balanced financial plan is a proven strategy for income growth and wealth protection. Diversifying can mean a mix of 401(k) funds, IRAs and Roth IRAs, fixed indexed annuities (FIAs), mutual funds, stock investments, and more.
With the stock market, there is no guarantee of upcoming returns. This is a continuous reminder to think about how we can continue to build our retirement income strategy. A smart first step is to evaluate savings vehicles that protects against market volatility. Enter a fixed indexed annuity (FIAs).
An FIA helps protect your principal even in a negative market return. At the same time, it offers the opportunity to earn interest that is tied to the performance of a well-known index, such as the S&P 500, Dow Jones, NASDAQ, etc. The index is used as an external benchmark – you do not actually invest your funds in it. In all, FIAs are contracts with insurance companies, where potential interest earned is linked to an external index. Expect a guaranteed minimum rate of return and tax-deferred growth as well.
What will happen in the stock market? Anything is possible. Until a crystal ball can accurately tell us what we can expect, it is up to retirement savers to make decisions that will protect them from what lies ahead.
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