This is part 2 of a 3-part series on the safest places to put our money.
Back in the Great Depression, the American public completely lost faith in our banks and financial institutions. Panicked prevailed, virtually overnight, as mobs flocked to their local branches attempting to take out their money.
Of course, banks weren’t FDIC insured back then, and there wasn’t enough money to be doled out. Markets crashed, farms and properties foreclosed, and businesses went under. Most people lost their life savings and had to start over, if they could.
Thankfully, we’ve come a long way from those treacherous and uncertain times, and even when we hit the next Great Recession (and we will) or even Depression, there will be plenty of checks and balances to ensure our money will remain ours. Right?
Not necessarily, as we’re already seeing pensions going bankrupt and Social Security is definitely on its final throes. The sad reality is that the money and income streams you’re counting on – especially in retirement – probably won’t be there, or eroded to the point of not covering even basic living expenses.
So, safety is paramount when choosing how and where to invest. But instead of burying cash in tin cans in the back yard or hiding it in the walls (as people often did during the Depression!), we have far better options.
In fact, to ensure safety against market turbulence and even a financial collapse, we need to park our money in three places. Think of them as three separate vaults, and only you have the combination.
1. Fixed annuity
2. Fixed index annuity
3. Perm life insurance
Today, we’ll cover #2 on that list:
Fixed index annuity
The second vault where we’ll put our money is a fixed index annuity. In a fixed index annuity, the gains we’ll receive are tied to the market’s top index funds, such as the S&P 500, NASDAQ or DOW JONES AVERAGE.
What we’re trying to do with a fixed index annuity is capture some of the upside of the market, but without the downside risk.
So, when the market goes up, the value of our account goes up as well. But if the market collapses, like it did in 2008, we won’t lose a dime.
Sure, the gains won’t be as much as if we were in the market straightaway (since the insurance companies put caps on the gains), but you can expect fixed income annuities to still beat out the rate of return for CDs, money market accounts, regular fixed annuities, and bonds.
Sounds to me like a pretty great vault for your money!
Of course, having that in place is incredibly important considering the coming Social Security and pension plan crises that are imminent. Instead, we’ll turn our permanent life insurance into a lifetime income annuity.
Contact me if you’d like more help keeping your money safe, and say tuned for #3 on this list!