As you may have noticed, the stock market has moved up rather consistently over the last five months. For example, the S&P 500 Index rose 8.98% from January 3, 2012 through March 9, 2012, according to the MSN.money website. When the market is moving up as it has been, it is tempting to forget that there are still a variety of challenges that could derail this rally at any point (see first linked article below). That is why many professional investors choose to take some of their profits “off the table” as the markets rise. They then reinvest and ride the markets up to another level. However, if the markets begin to fall, their only loss is from their most recent purchase point, having locked in the gains they made earlier. Unfortunately, many amateur investors believe the rally will never end so they don’t lock in their gains on the way up and tend to lose most or all of the gains when the markets correct. It is difficult to do very well with this behavior.
That is one reason, among many, why I recommend various types of fixed annuities for some of people’s savings. All fixed annuities guarantee the principal and credited interest (guaranteed by the insurance company) earned by the annuity so the owner cannot lose it. And, fixed indexed annuities even provide the option of having interest credited based on the performance of a market index (S&P 500 Index, Dow Jones Industrial Index, Nasdaq 100, etc.) without the chance of losing money if the markets go down. So, much as the professional investors do, gains are locked in when the markets are rising so they are protected from loss when the markets fall.
Linked below is an article that speaks to the use of fixed annuities as part of one’s investment structure. I believe these are an important part of an overall investment strategy and can be particularly helpful in providing sustainable lifetime income. I am appointed with all the leading fixed annuity companies including all those which offer lifetime income benefit riders. I would be pleased to help you select an annuity with the features and benefits that best meet your needs.