Income Planning - Indexing
Each of us is responsible for making our money grow. It’s a fundamental necessity to ensure our livelihood from day to day and into our retirement years. We hope for good financial winds.
Some people are so intimidated by the thought of losing their hard-earned savings in retirement they place their savings into bank CD’s. It’s safe they say. Is it really? Consider for the past 100 years, inflation has run at 3.14% per year. So if you’re only earning 1% on your CD, how is that safe?
Some people would prefer to hand their savings over to a money manager to invest for them. If your money is invested in the stock market your principal could be at risk. If you are about to retire this loss may be unacceptable, as you may not have time to make up the loss waiting for the market to come back up.
There is good news however, and it is called an INDEX. An index is linked to various stock market indices that provide the potential for upside growth with NONE of the downside risk. When the market goes up you earn a reasonable rate of return. This amount now becomes your new principal balance. Should the market go down you don’t lose a penny. That’s right, your principle and interest earned are locked in, protected and guaranteed!