Fixed Index Annuity: Get the best of both worlds

 

Protection Of Principal And Profit Potential, Get The Best Of Both Worlds With A Fixed Index Annuity

Fixed index annuities are kind of a middle ground between fixed annuities and variable annuities.  They offer the safety and peace of mind that a fixed annuity offers because your principal is 100% guaranteed, but they also offer the potential higher benefit and risk that comes with an investment in a variable annuity.  Basically, the insurer who is selling the annuity takes the principal and places it in an investment grade bond portfolio that is 100% secure and backed by reinsurers.  The interest that is generated from the bond portfolio is then invested into a major index.  This allows you as an investor to benefit from market gains without risk to your portfolio.

One of the primary reasons a person chooses to invest in the market is for retirement savings later on in life, however depending on your current age and risk appetite, full exposure to the stock markets volatility may not be the wisest choice for your retirement nest egg.  The closer you are to approaching retirement, the more you need an investment vehicle that guarantees your principal so you don’t stand to lose everything in a major investment.  The market has been especially volatile over the last 12 years.  In 2000, the S&P 500 was hovering just over 1500, still, 12 years later it is just shy of 1500.  That means when you figure in inflation and an increase in cost of living each year, people with full exposure to that market index took it in the shorts.  When the market crashed several years ago, many individuals who were nearing retirement lost the majority of their life savings in the market.  Looking around today, most of the baby boomers who are getting close to retiring have very little with which to retire on. Limiting your exposure to the market can only help improve your retirement situation.

If you find yourself nearing retirement and desiring profit potential while protecting your hard earned nest egg, a fixed index annuity may very well be the right investment vehicle to augment your retirement savings. 

For more information visit www.MintcoFinancial.com

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