Annuity Pros - Blog #Investments

Survive a stock market dip

Thu, 01 Aug 2024 04:28:01 -0700

Survive a stock market dip

Any dip in the market can set people on edge. Feelings of uncertainty and worry are only natural: We see the numbers in our retirement accounts go down and we want to stop the bleeding any way we can. Of course, being able to check balances any time of day or night — and watching those numbers plunge in real time — doesn’t help fight the urge to react immediately.

If you’re feeling on edge during a market tumble, whether retirement is just around the corner or years from now, here are some helpful tips to keep in mind to help navigate market volatility with more confidence

Don’t sell

Panic selling stocks may be your first initial urge, but it is never a smart move. In fact, when the market is down, it’s the worst time to pull your money out.

The key to protecting yourself against this kind of reaction is to have a portfolio that matches your financial situation and goals for the future, including factors like your expected retirement age and your tolerance for risks. If your portfolio is too risky for what your gut can bear — whether because of your proximity to retirement or not — meeting with a financial professional can help you adjust your accounts to better match your risk to what you can tolerate.

Look ahead … far ahead

Don’t just focus on your balance right now. If retirement is not around the corner (meaning less than five years away), you shouldn’t fear the short-term changes of the market.

Over the long run, stocks increase in value, but that doesn’t mean there won’t be periods where they will decline. Instead of panicking, view these dips as buying opportunities that allow you to buy stocks at essentially a “sale” price. And if you’re putting money into your account evenly throughout the year, that means you’re bargain shopping when prices dip.

Reallocate your funds

If you’re not far off from retirement and want to make sure you don’t get socked on a dip right before you’re about to start your next chapter, it’s time to talk to a Annuity Pros about reducing your risk.

If you are close to retirement, it’s important to be much more risk averse and have a more conservative asset allocation. That may mean taking some of your funds and buying an income annuity to assure a monthly cash flow during retirement. Another option is a longevity annuity, which provides you with an annual income at a certain age like 80 or 85, which can protect you from outliving your retirement funds.

Remaining calm during a market drop is difficult, but essential to staying on track for the future, whether retirement is close by or still several years away. Meeting with Annuity Pros can help you better understand changes in the market and how to weather a stock market plunge with more confidence.

Individuals and businesses who would like to connect with Annuity Pros can get in touch instantly via our enquiry form.

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Rethinking risk tolerance

Sat, 01 Jun 2024 04:17:00 -0700

Rethinking Risk Tolerance

Many of us have some level of investment in the market — with many working-age adults choosing 401(k)s and IRAs to help save for the future. But when we experience market volatility, it may lead you to rethink how much risk you’re willing to take with your nest egg, especially if you’re in or nearing retirement.

Thinking differently about risk

It’s one thing to answer hypotheticals about saving and losing money when you’re planning for the future. But watching your 401(k) balance drop in market downturns sheds light on the real‑world implications. If experiencing market volatility has diminished your appetite for risk, now might be the right time to reassess your retirement savings plan.

What might your risk tolerance look like now? Take this quick quiz to help you gain a better understanding of what your risk tolerance and your expectations may be for the retirement products and solutions you choose.

Reducing your exposure to volatile markets and locking in some income guarantees may help you feel more confident about staying on track for the long term. Two strategies worth considering include:

Allocating more of your savings to fixed‑income options
Putting a portion of your portfolio in annuities

Finding comfort across the spectrum

Annuities are designed to help you achieve your retirement savings goals and provide future income. By helping insulate you from major financial risks like stock market losses or outliving your money, they could be part of a solution that helps you stay in your financial comfort zone. In this chart, you’ll see how different kinds of annuities are mapped along a risk spectrum. The left side of the spectrum is the most conservative. Anyone with the highest tolerance for risk may feel comfortable at the far right.

Diving deeper into annuity options

While all annuities are designed to provide income for retirement, there are different kinds to align with your accumulation goals and how much risk you’re comfortable taking.

Immediate Annuity
Carrying the lowest risk, immediate annuities convert your premium payment to a guaranteed income stream for life, or for a specific period.
Fixed Annuity
Fixed annuities offer a fixed interest rate that’s guaranteed for a certain time period. The guarantee may appeal to you if you’re willing to sacrifice the potential for higher returns if the markets rise.
Fixed Indexed Annuity
In the middle of the spectrum, fixed indexed annuities have become increasingly popular with people who have a moderate appetite for risk. You can earn interest credits based in part on the upward movement of a stock market index while enjoying the protection of a zero percent floor. If the net change in the index over a given crediting period is negative, you would earn zero interest credits for that period, but never less than zero.
Registered Index-Linked Annuity
These products are designed for people with a higher risk tolerance. Registered index-linked annuities offer the potential for index credits tied to index performance while providing a measure of protection from market loss.
Variable Annuity
This type carries the highest level of risk because your money is invested directly in the market. Variable annuities offer the highest growth potential of any of the products on the annuity spectrum, but they also leave you fully exposed to market loss.

Economic repercussions have led many people to rethink their appetite for risk and whether their financial strategy still meets their goals. This may be the time to talk with a financial professional about ways to help keep your retirement savings better protected, especially in the event of future downturns.

Want the most from your retirement? Get smarter with strategies from Annuity Pros. Your source for tips, tools and financial solutions that can help you live your best life.

Individuals and businesses who would like to connect with Annuity Pros can get in touch instantly via our enquiry form.

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