Use Safe Money To Offset Sequence Of Returns Risk

By |2020-01-13T19:11:34+00:00January 13th, 2020|Uncategorized|

I recently had a local CPA call me and said he was listening to my Safe Money Radio Show and couldn’t figure out how one could get most of the ups of the stock market and none of the downs. He said he was a long-time investor with TDAmeritrade and it just didn’t make sense and ask if I could show him how this could be accomplished. I explained to him that it was possible and I needed to educate him on some new financial products being offered by the Insurance Industry.

My explanation went like this—- Let’s look at the S & P 500 return for the last 20 years, from 1999 through 2018 and see what the market returned, and let’s assume one invested $10,000 at the beginning.

S & P 500 Stock Index**                                                         Safe Money Investment
YEAR       %Return     Year End Value     %    RETURN     Year End Value    *140%
1999          21.04            $12,104                21.04   $12,104  16,946
2000 -9.10 11,103 0 12,104
2001 -11.89 9,783 0 12,104
2002 -22.10 7,621 0 12,104
2003 28.68 9,807 28.68 16,946 23,724
2004 10.88 10,670 10.88 18,722 26,211
2005 4.91 11,194 4.91 19,641 27,498
2006 15.79 12,962 15.79 22,742 31,839
2007 5.49 13,674 5.49 23,991 33,587
2008 -37.00 8,615 0 23,991 33,587
2009 26.46 10,895 26.46 30,339 38,367
2010 15.06 12,536 15.06 34,908 48,871
2011 2.11 12,801 2.11 35,645 49,902
2012 16.00 14,849 16.00 41,384 57.887
2013 32.39 19,659 32.39 54,788 76,704
2014 13.69 22,350 13.69 62,288 87,204
2015 1.38 22,658 1.38 63,148 88,407
2016 11.96 25,368 11.96 70,700 98,981
2017 21.83 30,905 21.83 86,134 120,587
2018 -4,39 29,548 0 86,134 120,587

THE 5 NEGATIVE YEARS OF 2000, 2001, 2002, 2008, & 2018 = 84.48% and brings the total return
for the S & P to an average annual return to 5.62%

BY TAKING ALL THE NEGATIVE RETURNS OUT AND REPLACING THEM WITH A ZERO RETURN DRAMATICALLY AFFECTS YOUR LONG-RANGE RETURNS, NETTING AN AVERAGE RETURN OF
11.66%

* SOME PLANS PAY UP TO 140% OF WHAT THE MARKET RETURNS.
** Dividends not shown as reinvested
WHERE HAD YOU RATHER HAVE YOUR MONEY INVESTED? THE STOCK MARKET OR IN A SAFE MONEY INVESTMENT, WHERE YOU CAN GET THE UPS AND NONE OF THE DOWNS.

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