Did you know that in September of 2013 the Dow Jones Industrial Average was hovering at the same level it was 14 years before? The stock market can be advantageous during specific time periods, but brutal during other times.
Dreams can be crushed, retirement plans delayed. Can you afford to keep rebuilding your wealth every 5 to 10 years, here are some notable Wall Street crashes and the recovery times?
- 1929-1932 Dow fell 89% it took 22 years to recover
- 1939-1942 Dow fell 40% it took 3 years to recover
- 1973-74 Dow fell 45% it took 8 years to recover
Protect your principle at all cost.
Take for example a $100,000 investment and assume the market drops 30% and your money goes from $100,000 to $70,000. Usually, the losses in the stock market are quick from a month to a year or so.
How much growth do you need to get back to $100,000, you will need 42.9% growth on your money to get back to where you started. Now how long will it take to make your money back? Maybe three years but what if it took eight years or even 22 years.
Time value of money is critical if your retiring in 5 years and you are invested in the stock market your retirement dreams could be put on hold if the stock market falls 30 or 40%. Don’t gamble with retirement nest egg.
Annuity companies have what they called fixed indexed annuities. These annuities base their interest rate off a particular index like the S&P 500 Stock Index which allows a portion of the upside of the index with no downside market risk to your principle and once that interest is credited to your account it’s locked in. And they have these guaranteed income riders (for a fee usually 1% or less) which will ensure you a return for your income of 4 to 7% growth, and when you get ready to retire, you can get guaranteed lifetime income for you and your spouse.
Don’t gamble with your retirement nest egg. There is an old saying in the financial business:
“Pigs get fat, Hog’s get slaughtered.”
Don’t be the HOG.