Learn How to Guarantee Your Retirement and Protect Investments

Safe Money Alternatives and Definitions Certificate of Deposit A Certificate of Deposit is a short to medium term, interest bearing FDIC insured savings instrument. CDs offer higher rates of return than most other bank deposited products, in exchange for tying up invested money for the duration of the certificate’s term. Money Market Account A money market account is usually offered by a brokerage company. They are insured by the Federal Government. Money Markets are similar to checking accounts but usually pay a slightly higher interest rate in exchange for limited transactions. Rule 100? WHAT IS THE FIXED OF VS (No Risk) VARIABLE (Risk) The Rule of 100 is a guideline accepted by many people in the financial services industry that outlines an appropriate amount of risk you should carry in your portfolio. Very simply stated, you take the number 100 and subtract your age. The number remaining should be the percentage of your portfolio that is at “risk.” Remember, in this case, risk is defined as money that is not principal protected. PROFIT LOSS Savings Account Bank CD Fixed Annuity FIA Let’s look at an example: You are 65 years old. 100 – 65 = 35 35% would be the percentage of assets that should be at risk, while 65% should be placed in principal protected or safe money accounts. Teeter-Totter Example Variable Annuity Mutual Funds Stocks Savings Account Savings accounts are usually maintained by retail financial institutions (usually banks). The account pays a relatively low rate of interest, and there are no check writing privileges. Customers normally use these types of accounts for their “set aside” money. Fixed Annuity A fixed annuity is a contract between you and an insurance company. The insurance company normally offers a certain “fixed” rate of interest in exchange for you entrusting them with the money for a pre-determined, stated period of time. Interest on fixed annuities is also tax deferred. Fixed Index Annuity A fixed index annuity is similar to a fixed annuity in that it is guaranteed by an insurance company’s financial strength. The primary difference is that the interest rate is “linked” to a common index (i.e. S&P 500). By doing this, it allows you the opportunity to earn a percentage of the increase in “up” market years, but offers principal protection in “down” market years. The interest is also tax deferred. Fixed Index Annuities – Myths vs. Truths Many myths exist regarding Fixed Index Annuities. We would like to set the record straight and give you factual answers regarding these products. 4. Are my returns taxed? All annuity values accumulate tax-deferred until you take the money out of your policy. Your account can grow faster because you will earn interest on the money on which you would have normally paid taxes. Remember, there can be IRS penalties for any money taken out before age 59 1/2. 1. Is my principal guaranteed? Yes it is. Unlike securities or mutual funds where your account balance fluctuates due to market performance, your Index Annuity is guaranteed to never go down due to market downturns. You only participate in market related growth, but never market loss. 5. Do I have access to any of my money that is in an FIA? Yes, most FIA policies have a term of 7 – 12 years in duration. During that period however, most policies allow you to take out 10% of your value per policy year. Please be sure to ask your agent for specific details. 2. What happens to my policy values during a down market year? If in a given year of your policy, the market turns down, the worst case scenario would be that you receive a 0% return for that year. Remember, your principal is guaranteed. 3. What about any returns that are realized in my policy? Not only is your principal protected, but any increases you realize are also locked in because of the annual reset feature most FIAs have. 6. How safe is my money? All tax-deferred annuities are backed by the financial strength of the insurance company issuing the policy. Once again, be sure to ask your agent for the ratings of the company he/she recommends. 7. What happens if I die? As long as you have a named beneficiary, they will receive the proceeds from your policy. In most cases, a lump-sum or monthly income can be taken. In many states your annuity value passes directly to your beneficiary and avoids the expense (and delays) that come with probate court.
Safe Money Alternatives and Definitions Certificate of Deposit A Certificate of Deposit is a short to medium term, interest bearing FDIC insured savings instrument. CDs offer higher rates of return than most other bank deposited products, in exchange for tying up invested money for the duration of the certificate’s term. Money Market Account A money market account is usually offered by a brokerage company. They are insured by the Federal Government. Money Markets are similar to checking accounts but usually pay a slightly higher interest rate in exchange for limited transactions. Rule 100? WHAT IS THE FIXED OF VS (No Risk) VARIABLE (Risk) The Rule of 100 is a guideline accepted by many people in the financial services industry that outlines an appropriate amount of risk you should carry in your portfolio. Very simply stated, you take the number 100 and subtract your age. The number remaining should be the percentage of your portfolio that is at “risk.” Remember, in this case, risk is defined as money that is not principal protected. PROFIT LOSS Savings Account Bank CD Fixed Annuity FIA Let’s look at an example: You are 65 years old. 100 – 65 = 35 35% would be the percentage of assets that should be at risk, while 65% should be placed in principal protected or safe money accounts. Teeter-Totter Example Variable Annuity Mutual Funds Stocks Savings Account Savings accounts are usually maintained by retail financial institutions (usually banks). The account pays a relatively low rate of interest, and there are no check writing privileges. Customers normally use these types of accounts for their “set aside” money. Fixed Annuity A fixed annuity is a contract between you and an insurance company. The insurance company normally offers a certain “fixed” rate of interest in exchange for you entrusting them with the money for a pre-determined, stated period of time. Interest on fixed annuities is also tax deferred. Fixed Index Annuity A fixed index annuity is similar to a fixed annuity in that it is guaranteed by an insurance company’s financial strength. The primary difference is that the interest rate is “linked” to a common index (i.e. S&P 500). By doing this, it allows you the opportunity to earn a percentage of the increase in “up” market years, but offers principal protection in “down” market years. The interest is also tax deferred. Fixed Index Annuities – Myths vs. Truths Many myths exist regarding Fixed Index Annuities. We would like to set the record straight and give you factual answers regarding these products. 4. Are my returns taxed? All annuity values accumulate tax-deferred until you take the money out of your policy. Your account can grow faster because you will earn interest on the money on which you would have normally paid taxes. Remember, there can be IRS penalties for any money taken out before age 59 1/2. 1. Is my principal guaranteed? Yes it is. Unlike securities or mutual funds where your account balance fluctuates due to market performance, your Index Annuity is guaranteed to never go down due to market downturns. You only participate in market related growth, but never market loss. 5. Do I have access to any of my money that is in an FIA? Yes, most FIA policies have a term of 7 – 12 years in duration. During that period however, most policies allow you to take out 10% of your value per policy year. Please be sure to ask your agent for specific details. 2. What happens to my policy values during a down market year? If in a given year of your policy, the market turns down, the worst case scenario would be that you receive a 0% return for that year. Remember, your principal is guaranteed. 3. What about any returns that are realized in my policy? Not only is your principal protected, but any increases you realize are also locked in because of the annual reset feature most FIAs have. 6. How safe is my money? All tax-deferred annuities are backed by the financial strength of the insurance company issuing the policy. Once again, be sure to ask your agent for the ratings of the company he/she recommends. 7. What happens if I die? As long as you have a named beneficiary, they will receive the proceeds from your policy. In most cases, a lump-sum or monthly income can be taken. In many states your annuity value passes directly to your beneficiary and avoids the expense (and delays) that come with probate court.
Safe Money Alternatives and Definitions Certificate of Deposit A Certificate of Deposit is a short to medium term, interest bearing FDIC insured savings instrument. CDs offer higher rates of return than most other bank deposited products, in exchange for tying up invested money for the duration of the certificate’s term. Money Market Account A money market account is usually offered by a brokerage company. They are insured by the Federal Government. Money Markets are similar to checking accounts but usually pay a slightly higher interest rate in exchange for limited transactions. Rule 100? WHAT IS THE FIXED OF VS (No Risk) VARIABLE (Risk) The Rule of 100 is a guideline accepted by many people in the financial services industry that outlines an appropriate amount of risk you should carry in your portfolio. Very simply stated, you take the number 100 and subtract your age. The number remaining should be the percentage of your portfolio that is at “risk.” Remember, in this case, risk is defined as money that is not principal protected. PROFIT LOSS Savings Account Bank CD Fixed Annuity FIA Let’s look at an example: You are 65 years old. 100 – 65 = 35 35% would be the percentage of assets that should be at risk, while 65% should be placed in principal protected or safe money accounts. Teeter-Totter Example Variable Annuity Mutual Funds Stocks Savings Account Savings accounts are usually maintained by retail financial institutions (usually banks). The account pays a relatively low rate of interest, and there are no check writing privileges. Customers normally use these types of accounts for their “set aside” money. Fixed Annuity A fixed annuity is a contract between you and an insurance company. The insurance company normally offers a certain “fixed” rate of interest in exchange for you entrusting them with the money for a pre-determined, stated period of time. Interest on fixed annuities is also tax deferred. Fixed Index Annuity A fixed index annuity is similar to a fixed annuity in that it is guaranteed by an insurance company’s financial strength. The primary difference is that the interest rate is “linked” to a common index (i.e. S&P 500). By doing this, it allows you the opportunity to earn a percentage of the increase in “up” market years, but offers principal protection in “down” market years. The interest is also tax deferred. Fixed Index Annuities – Myths vs. Truths Many myths exist regarding Fixed Index Annuities. We would like to set the record straight and give you factual answers regarding these products. 4. Are my returns taxed? All annuity values accumulate tax-deferred until you take the money out of your policy. Your account can grow faster because you will earn interest on the money on which you would have normally paid taxes. Remember, there can be IRS penalties for any money taken out before age 59 1/2. 1. Is my principal guaranteed? Yes it is. Unlike securities or mutual funds where your account balance fluctuates due to market performance, your Index Annuity is guaranteed to never go down due to market downturns. You only participate in market related growth, but never market loss. 5. Do I have access to any of my money that is in an FIA? Yes, most FIA policies have a term of 7 – 12 years in duration. During that period however, most policies allow you to take out 10% of your value per policy year. Please be sure to ask your agent for specific details. 2. What happens to my policy values during a down market year? If in a given year of your policy, the market turns down, the worst case scenario would be that you receive a 0% return for that year. Remember, your principal is guaranteed. 3. What about any returns that are realized in my policy? Not only is your principal protected, but any increases you realize are also locked in because of the annual reset feature most FIAs have. 6. How safe is my money? All tax-deferred annuities are backed by the financial strength of the insurance company issuing the policy. Once again, be sure to ask your agent for the ratings of the company he/she recommends. 7. What happens if I die? As long as you have a named beneficiary, they will receive the proceeds from your policy. In most cases, a lump-sum or monthly income can be taken. In many states your annuity value passes directly to your beneficiary and avoids the expense (and delays) that come with probate court.