If you have ever flown in an airplane the first thing the flight attendant will explain over the intercom is an exit strategy—how to exit the airplane in case of an emergency. Maybe you have been on a cruise. The first requirement of the trip is that everyone participates in an exit strategy muster in case the boat begins to sink. What does that have to do with your financial well-being?
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If you have more than 30% of your life savings and/or retirement exposed to the risks of the stock market (including the bond market), you will want to consider this.
The stock market is still lower today than it was 12 years ago. With the exception of additional contributions you or your employer have made, your retirement accounts are probably lower if you have subscribed to the “buy and hold” philosophy.
Does it make sense to exit the financial roller coaster you have been on for the past 12 years?
Let me explain why it may be time. Fed Chairman Ben Bernanke recently announced the release of QE3, which is designed to pump more money into our monetary system for the purpose of kick-starting our economy into a recovery. This is accomplished through the promotion of more borrowing which theoretically should lower the unemployment rate in the United States. This should, in turn, cause more of the working people to spend. Since 70% of the stock market is driven by consumption, it would only make sense that the stock market would respond positively. Right?
Well, as you can see from the chart below the first two batches of QE (Quantitative Easing), one in 2009 and then the other in 2010, caused the S&P 500 to rise. Each of the past rounds of QE were large injections of $600 billion a piece, but the most recent announcement of QE3 is only $40 billion per month gradually for an unknown amount of time (6 months, 1 year, 2 years?).
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I once had a client say, “Pigs get fat, and hogs get slaughtered,” meaning sometimes we have to know when to “hold and know when to fold” when it comes to exiting the stock market. What I have found in 25 years as a Retirement Advisor is that most people are emotional investors and do not know when it is time to move to the sidelines for a while, especially after a 12-year flat market.
So where should you put your money...
…If you need guaranteed growth for future income needs?
…If you want to earn better returns than what a CD would offer you?
…If you want to receive a guaranteed income for the rest of your life that you cannot outlive?
…If you want your principle protected from the rollercoaster ride of the stock market?
Then you may want to consider a fixed indexed annuity that will grow in good and bad economic times, has a robust income guarantee, and is offered by a company that has been around since at least before the Great Depression of 1929 (indicating good financial stewardship during the worst economic era of our countries life and through all of the economic and political upheavals and wars of the past 83 years).
Don Rasmussen is a retirement planning expert with offices in Texas and North Carolina and specializes in helping clients secure their financial futures and plan for the unexpected. President and CEO of We-CARE Wealth & Tax Management, LLC and Quartermaster Financial, Don can be reached at 800-992-4374 or email@example.com