Financial advisor Frank Guida explains why he thinks that indexed annuities are the best products for your 401k or IRA transfers in his Fox Business article ?Where to Put IRA/401k Money in Today?s Economy.?? Even though interest rates are low, people are using fixed annuities, CD?s, and money market accounts to guarantee some type of return for their retirement income.? Guida says that many times, these fixed rate products are not offering enough interest to make up for the rate of inflation.? Bonds and bond mutual funds offer a higher rate of return than fixed rate products, but they do come with more risk that the previously mentioned investments.? Often these bonds are not able to keep up with inflation either.
A lot of investors still use stocks and mutual funds tied to stocks for their money.? We all know that markets go up and down and carry much more risk compared to annuities or other investments.? If you have invested money into the stock markets and they have gone down then back up the same percentage, you still end up down because your gain was off of a lower amount.? It takes a larger gain to get your investments back to where they were originally, not to mention losing any interest that you could have gained with another investment.? With a long list of investments that may not be great for either keeping or growing your retirement savings, Guida recommends an IRA or 401k annuity transfer to an indexed annuity product.
Indexed annuities are most often linked to the S & P 500, Dow Jones, Euro 50, and other popular indexes.? Recently, insurance companies have been using the TVI index (Trader Vick), which links to commodities like gold, livestock, energy, grains, and silver.? They believe that the TVI and others similar to it can help maximize the growth opportunities for indexed annuities.? Out of the last twenty years, the TVI index has had gains in eighteen of them.? Not many investments can boast that statistic.? Those annuities linked to the TVI typically have income riders and a premium bonus to increase the retirement income of investors.? Guida lists seven advantages to linking to the TVI index.
Inflation is actually not a bad thing when you are holding commodities.? As the price of goods and services increases, so does the price of commodities and your portfolio will see profits.? A 300% increase in the U.S. money supply over the past four years is likely going to make for a less valuable dollar, which causes the same effect on commodities as inflation.? The national debt is climbing and the only two ways to stop this are reduced government spending and increased taxes.? While an increase in taxes hurts businesses and stock market returns, it does not affect commodities in that negative way.? An exponentially growing world population increases the price of commodities because of simple supply and demand.? Demand grows and less land for supply increases the price for physical commodities, which is good news for the TVI index.
Since the TVI is a long/short index, investors can make money when it is going up or down based on the prices.? This is very different from the stock market, where you only make money when the market is increasing.? Guida says that this index is one of the only safe ways to invest in commodities.? Diversification is one of the greatest ways to protect your retirement savings.? By investing in traditional stock market indexes as well as the TVI, you have the ability to gain in your TVI index even if the stock market indexes are down.? The TVI offers gains without a cap.? This is very different from traditional stock market indexes.? This is a new index recommended by this particular financial advisor, but it could be a good way for you to invest your retirement savings in an indexed annuity.? Speak with an expert about the different types of indexed annuities available.
Written by Rachel Summit
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Source: http://www.annuityfyi.com/blog/2012/08/a-different-index-for-your-401k-annuity-transfer/
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