by GarySpicuzza » Wed Oct 08, 2008 10:08 am
Traditional Fixed Annuities and FIXED Indexed Annuities
AND
the value of NOT losing principal and what type of impossible stock market returns one would have to get to just stay even with a SAFE investment that's just limping along at 5% per year.
A couple of pictures are worth a few thousands words:
AND
the value of NOT losing principal and what type of impossible stock market returns one would have to get to just stay even with a SAFE investment that's just limping along at 5% per year.
A couple of pictures are worth a few thousands words:
Posted: Fri Oct 10, 2008 05:53 pm Post Subject:
Okay so far getting the math thing. Now don't laugh but what is considered a "fixed savings instrument". You know comapnies offer 401k's to their workers but alot of us really don't understand the whole industry. Before I would just look to see if the amount was going up.
Also is there a way to learn more about how to understand all this..books,online ANYTHING?
Posted: Fri Oct 10, 2008 07:48 pm Post Subject:
Fire'
No one can possibly advise you on your 401k without knowing what your options are and the best source of information should be the broker that services that account.
Most 401ks have some sort of fixed savings instrument that pay a guaranteed known rate of return without the risk of losing principal. Whether it's a CD, or a govenment bond or municiple bond.
Checking to see if your balance goes up doesn't mean you're making money. If you put in $25 and your employer puts in $25 and if at the end of the month your balance went up by $35 dollars....you lost money.
Like I said above this is 4th grade math.
You're not up $35.
You're down $15.
There are many people who just figure their losses based on what they put in only. In my example above your not up 40%, you are actually down 30% on the total contribution for that month.
If your hubby's employer matches up to 5% I'd put 5% in. Now you've made 100% on your money and I'd (meaning me personally) would protect every penny of that from any loss.
Posted: Fri Oct 10, 2008 07:57 pm Post Subject:
Hello Garry,
I sold an Indexed Annuity to a client last year and her annual review came up in June. By that time the market did not do well and she basically did not make any money. She was a bit dissapointed but was satisfied that she did not lose any money. Today, I know that she is so happy that she has invested in this Indexed Annuity because the market is way down and her principle will be safe. The only down side is that when the market does well, she will not enjoy the major gains (whenever they return). For her age and income this was the best choice that she could have made.
Michael
FindYourPolicy.com
Posted: Sat Oct 11, 2008 01:16 am Post Subject:
I hear that people are suppose to hang in there. I do not know how true it is but they are saying if you pull your money now when the market does make a turn you won't have a chance to gain back what you lost. Any truth to that statement?
Posted: Sat Oct 11, 2008 09:41 am Post Subject:
I hear that people are suppose to hang in there. I do not know how true it is but they are saying if you pull your money now when the market does make a turn you won't have a chance to gain back what you lost. Any truth to that statement?
Maybe.
But if you don't lose any money from the start you'll be way ahead of the game. A 40% loss of principal will NEVER be made up.
And even if they do make it up in ten (10) years they are only back where they started.
A person age 60 who had $500,000 in their IRA or 401k plan now only has $300,000 left. If at age 70 they make it back up to $500,000 they effectively had 0% growth on their money for the past 10 years.
Another person age 60 who put their money in the most boring of places, a Traditional Fixed Annuity, would have at least $671,958 at age 70 based on a 3% minimum guarantee.
Now our stock broker competitors would claim 3% doesn't even keep up with inflation.
But isn't it interesting that my client with her $500,000 SAFE and sound will have at least $671,958 at her age 70.
Their client will be lucky to even get their $500,000 back and to do so requires them to continue to keep the $300,000 that's left AT RISK with the day traders playing stocks like a flee market swap meet.
So leave it in?
OR
Take it out?
Well does the person want to protect the $300,000 that's left with the hope they make it back by risking further decline or do they get out, stay out and learn they have just been played...... AGAIN!?
Posted: Sat Oct 11, 2008 09:49 am Post Subject:
Fire, I really feel for you, fortunately my husband put a lot of time and effort into understanding all this and handles both of our accounts (very well I might add)...it frankly makes my head ache...
Most companys web sites have all kinds of learning tools and planning tools based on your answers to questions (ie amount to time left to retirement, ACCEPTABLE risk etc), look around the web site and see if you don't see some sort of planning/learning area....I HATE this stuff...but we really need to educate ourselves especially now...
You pay a monthly fee? man neither one of ours has that...if so I'd say you probably wouldn't be charge a thing....to call and talk with someone just ask them when they pick up the phone before you go into anything...of course they say to stay put, and maybe that's the best for you...my husband did the math after yesterdays disaster in the market, had we stayed put (he moved us in March of this year) after yesterday he and I would have lost 120k between the two of us! I'm so thankful for him!
Posted: Sat Oct 11, 2008 07:17 pm Post Subject:
Wow what a great hubby. We just got our new statement in the mail and so far we are out $2000 not alot but half of that has been recently. They also put a letter in that they are raising the fees to monitor the account. We are calling on Monday but in the mean time I registered online so we can view and learn about the account. Hopefully I can make something out af all of it. I see that we are at the growth level..maybe going down to preservative would help. Gonna look into it and see if this head can absorb any or some of it. Thank You.
Posted: Sun Oct 12, 2008 11:53 am Post Subject:
Wow what a great hubby.
Yep, in so very many ways...maybe going down to preservative would help
ABSOLUTELY you won't make as much but you shouldn't lose ANY...which right now is the thing to do (IMO)....most have a lot of information and education I'm sure you'll understand it a lot better after going over all the info and guides they have on their site.Posted: Sun Oct 12, 2008 01:37 pm Post Subject:
Started reading up on it and learning some things already. I see that having 90% of the money in high risk isn't good. I also didn't relize that since 2006 the account has made no money. Going to call tomorow morning before heading to the pain clinic and get things out of high risk. Thanks.
Posted: Sun Oct 12, 2008 07:35 pm Post Subject:
yep, i'd get right on that if i were you...
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