If we were to put the stock market into baseball terms, we could say that it is currently in the ninth inning of a nine-inning game. So what does that mean exactly? Well, a few things. Typically, when the stock market nears this point, it’s getting ready to correct itself. To quote world famous economist Roger Ibbotson about these economic times “It is time to de-risk your portfolio”.
As you know, when stock markets correct, it can have a rippling effect on the economy, businesses, and your own personal finances, especially if you are nearing retirement. This can be especially true when it comes to the safe money you have invested in bonds. So what can you do to prepare for a potential stock market correction? Well, receiving financial advising from ChristianCare360 is a good first step to take.
If we are being honest, the safe money you keep in bonds isn’t always safe. In fact, if interest rates continue there upward trend, the underlying value of those bonds could see loses of thirty to forty percent, perhaps even more, and you could lose your money. That’s why, when it comes to our safe money, risk is completely unacceptable, but we still want to maximize our returns.
In an article published in PRNewswire, Zebra Capital Management reported that iconic economist Roger Ibbotson revealed research that there are be better places to put our safe money than bonds, including fixed index annuities. Fixed index annuities are accumulation products issued by insurance companies. They are tax-favored and can even be tax-exempt and their annual growth can benchmarked to a stock market index, and other uncorrelated indices that can offer substantial returns even during a stock market correction.
In his research, Ibbotson found that fixed index annuities “help control equity market risk, mitigate longevity risk, and have the potential to outperform bonds in the near future.” Ibbotson says that based on different factors such as the fact that people are living longer and that the market is constantly shifting, financial advisors need to explore alternatives to bonds and other traditional investments.
While conducting his research, Ibbotson utilized dividend rates, interest rates, and historical volatility data from the past 90 years. From this research, he found that fixed index annuities can outperform bonds, that bond investments may result in capital losses in the near future, and that fixed index annuities reduce market risk.
His research illustrates the need to diversify your safe money. So when the ninth inning is over and the stock market corrects itself, you can minimize your risk and protect yourself from losing your safe money.
When you undergo financial advising with ChristianCare360, we ensure that we explore all of your options with you, including fixed index annuities. Other companies may suggest you invest in bonds right away, but this can put you at risk during this economic climate, which is why we the plans to protect your safe money and to maximize your earnings. Call us today to learn more about how we can help you.