I don't know about you, but I'm a bit freaked out about the stock market. Today it is not uncommon for the stock indexes to go up and down 10% in one day. To say that is volatile is an understatement.

 

You know what everyone says: If you are in the market for the "long-term" you don't have to worry about the short-term losses.

 

 

This is a new very volatile world and I wrote this article to give you something to think about to determine if buying and holding stocks right now is a good idea even when looking at the long term?

 

Ask yourself this question: If the stock market goes up and down and up and down over a ten year period and ends up at the same point ten years from now, will the account balance be the same at the end of the ten year period?

 

 

Look at the following chart where I assumed a very volatile market that goes up and down 10% every year and after ten-years the average return is ZERO. You'll notice that the account value is $95,438.

 

 

 

For many investors, the above numbers look all too familiar (actually most investors who have actively traded money are down well over 30% over the last 18+ months).

 

While this article is meant to be more thought provoking than one that gives you all the answers for how to protect and grow your wealth, I did want to discuss briefly a useful and protective wealth building tool known as a Fixed Indexed Annuities (FIA) 

 

FIAs are not a cure all, not every penny of someone's money should be in them, but as an asset allocation model, the older you get, the more money you should have in a wealth building tool that will not go backwards.

 

FIAs are a unique tool that once funded your money is guaranteed never to go backwards and the product design for the majority of FIA locks in your gains every year. As we all know in life, there is no free lunch, and with FIAs there is a cap on the annual return you can receive (caps today run from 8-11.5% depending on the product).

 

What if you had the same $100,000 inside a FIA with a very conservative 8% cap over the same ten-year zero rate of return time frame? Look at the results.

 

 

Why did the FIA end up with an account balance of $146,933 instead of $95,099? Simple, in down years the FIA returned ZERO instead of -10% and in up years it returned 8%.

 

Are these examples real world? Prior to 1998 you would have said no way? Are these examples real world? No one really knows but they could be. The question of the day is: are you doing everything you can to help protect your money in this uncertain world.

 

I'm not sure if the days of "buy and hold" have come and gone as a tried and true way of growing your wealth. That may or may not be the case. What I know is that I wanted to make you aware of the real numbers and give you a little information on one alterative wealth building tool known as a FIA. 

 

If you have any questions about this article, please feel free to e-mail me at info@LevinWealthSystems.com.