The market is at an all time high! Wouldn’t it be awesome to “capture” all your gains and be protected from any loses! In a nut shell this is what “market timing” seeks to do. The track record for this of course is pretty miserable, as I talked about in January’s newsletter.
But there are sensible ways to approach this “growth” and “protection” desire that we all have.
The first step is making sure you always have the appropriate amount of assets allocated to guaranteed accounts, as well as to growth accounts. Of course “appropriate” is the key word. Appropriate to what? How you feel about the market? What the market ‘predictors’ say you should do now?
Your “appropriate” allocation between safety and growth should be entirely focused on what you need your money to do for you – now and in the long term. In other words allocate for an “appropriate” game plan.
“Protect” your income sources for the near and mid-term. “Advance” your assets for the long term.
Part of what we often use for the income protection portion of a plan is is a Fixed Index Annuity. Typically we include a guaranteed lifetime income rider. Interestingly, these accounts have inside them a mini-version of an advance and protect strategy. Their indexed strategies protect your account balance from going backward when markets recede , while capturing part of the growth going forward.