Yesterday, a client called me worried about how her investments have been doing with me, due to the decline in the stock market during the last year. She deposited $180,000 into an annuity on July 22, 2006. So I’ve been collecting data on her account to review with her, and it’s too good not too share with you.
Her current annuity value is $197,091, and she has withdrawn $21,000. So had she not touched the money, her account would be worth approximately $218,000 today! Had my client simply been investing in an ETF tracking the S&P 500, her $180,000 would be worth $88,800 today. (39% decrease from $180,000 = $109,800 - $21,000 withdrawals)
Why did my investment do so well for her? Because I recommended that $180,000 go into an fixed, equity indexed annuity. It always moves forward with the S&P 500, but in the years the S&P 500 goes down, you get a 0 rather than a negative. You can’t lose. She immediately got an 8% bonus on her 180K. Then the stock market went up from July of 2006 to July of 2007 from 1240 to somewhere in the 1500 range. So she got the bonus and then locked in the gains of the market in that first year and has lost nothing since then. In fact, on her first anniversary, we put a percentage of her funds into the fixed portion of the annuity earning 2.7%, so she has even made money during the last year when everything else has been decreasing.
To date her account has been credited with $38,108. The best thing about the annuity is that if and when the S&P returns to profitability, she will be participating in the gains from her current level, not having to make up 39% of her portfolio first. In an fixed indexed annuity, you always move forward, never back.
If you’ve had enough of this market and want to see how indexed annuities can save your retirement, call me, Chris Huntley at (619)564-4873.
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