Wednesday, March 18, 2009

Safety Has Once Again Risen To the Forefront- Thank Goodness!

It was less than a year ago that clients were willing to forsake safety and a steady return for the chance to “make it big” with gas and oil, REITs, real estate and other volatile investments.

They decided to pay all their capital gains tax and depreciation recapture up front so they could invest their hard earned proceeds – often with the help of money managers- to not only get back where they started from before taxes, but to soar ahead of a measly 6% return and tax deferral.

Why put money into principle protected products that don’t lose in bad markets and gain only a portion of the growth that stock indexes make in good times? How boring!

Do you know anyone who has lost a LOT of money in the market this year, in gas and oil, in real estate, in a business? I do. I have taken a beating in my own retirement plans.

The people I know who are the happiest are the ones that opted for the boring equity indexed annuity and who have experienced zero loss and an income stream that pays the monthly expenses. When the market does come back, and it will eventually, they will start where they left off and not have to dig out of any holes going forward.

It takes a crisis like the one we are in to appreciate slow and steady versus quick and uncertain. Now when I get calls, the first thing I’m asked is how will they be assured their principle is protected?

If I look back to my parent’s generation, who worked and saved rather than borrowed and spent, we have come full circle. I think it’s a much better way to go.

How about you?

Paula Straub
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