One of Our Three Core Principles:
Reasonable Rate of Return**
What is a Reasonable Rate of Return?**
One important aspect of planning for retirement is setting expectations.
What is a "reasonable rate of return"** from a retirement account?
The ideal rate of return should allow you to gain interest on your account, so as to compensate for cost-of-living increases in the future and ensure you don’t run out of money. However, it’s important that you also have protection of your principal. Fortunately, we know of options that can provide both reasonable rates of return** and safety. You should be able to keep your money safe when the stock market is down, but still participate in some of the growth when the market is up. The products we offer can help you do just that.
You Don't Have to Choose Between Safety and Reasonable Rates of Return**
As we mentioned, you don’t have to choose between the features of reasonable rates of return** and safety. There are strategies that can provide both, and those are the types of strategies you should look for.
As you near your retirement, your priorities may shift. Safety becomes more important, because you have less and less time to recover from a loss as you age. But, you don’t want the savings you do have to run out during retirement, which is why a reasonable rate of return** is so important. An important risk/reward balance is crucial to your retirement strategy.
To make the decisions that are best for you, you need information.
What you do with your money now will drastically impact your future. One factor that many pre-retirees don’t consider? Inflation. Inflation rates are something you must factor into your retirement strategy: It’s easy to forget that it’ll actually take more money in the future to live the same way you do presently.
Thankfully, there are some financial vehicles you can use that take inflation into account, and provide a reasonable rate of return** based on it.
Risk Vs Potential Gain: Keeping the Balance
Typically, risk and rate of return tend to go hand-in-hand. This is concerning. Investments that entail potentially high gains are far from ideal when they also entail high risk. What is a reasonable rate of return if all of your money could potentially be lost? But, take a look at some safer methods of saving money: Traditional savings accounts, bonds, and CDs all offer protection for your money. However, these accounts often don’t come with very good rates of return. Additionally, you may have to pay taxes on the interest from these types of accounts, making your actual rate of return even less. None of these options are completely ideal.
FIAs and Rates of Return
FIAs (fixed indexed annuities) can provide you with a reasonable rate of return** while still keeping your money safe. How does this work? Well, an FIA grows based on the performance of an index or indexes. First, if the index reaches a certain level, you receive a credit to your account. Next, the issuing insurance company calculates the rate of this credit based on a number of factors. There are other benefits to FIAs, that we can talk with you about in more detail.
Meet with us, or attend one of our educational seminar events.
At our one-on-one meetings, we can answer your questions, review your current strategy, and talk about adjustments you may want to make.