Since the United States stock market crash of 2008, millions of Americans have seen their retirement savings dwindle. Many of these savers had their nest eggs exposed to the equities markets and have subsequently suffered two periods of extreme loss in one decade. This time period has been referred to as “The Lost Decade” for investing and as a result, “Safe Money Places” are getting a lot of attention.
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Safe money places are vehicles that are used for the money you cannot afford to lose; they’re accounts that provide peace of mind knowing your principal is protected from loss as a result of market fluctuations. Risk money places, like the stock market, mutual funds, bonds, commodities, and real estate, have no guarantees. While there is potential for HIGH returns in risk money places, there is also the potential of losing everything you invest.
One must always remember the relationship between risk and return when considering risky money accounts versus safe money accounts. The risk vs return tradeoff dictates that, in order to realize greater returns, one must generally accept a greater risk and vice versa.
In 2012, many people nearing retirement have turned to safe money accounts. According to Globe Newswire, EVANSTON, Ill, December 4th, 2012, Fixed Indexed Annuities and Income Annuities (both SAFE money accounts), just had a record 3rd quarter. On a year-to-date basis, both product types had record-high results: indexed - $25.7 billion (up 4.5%); income - $6.8 billion (up 9%).
"Indexed and income annuity market shares grew because their value propositions were attractive relative to the conservative alternatives in third quarter's low interest rate, uncertain economy," said Jeremy Alexander, CEO of Beacon Research.
These safe money accounts provide the potential for attractive returns and guaranteed lifetime income, without having to accept the losses of risk money places. Given today’s low interest rates and continued high risk of market fluctuation, a portion of your retirement dollars should always be invested in safe money accounts like Indexed Annuities with guaranteed Lifetime Income Benefit Riders.
For more information about how to start your own safe money account, email me anytime at email@example.com .
Brad Pistole is the President and CEO of Trinity Insurance & Financial Services, INC located in Ozark, Missouri. He is an Ed Slott Master Elite Advisor with Ed Slott & Company LLC, and the host of the weekly radio show Safe Money Radio in Springfield, MO.