Those who want to invest for retirement know how secure is the stock market because it seems that links the city to invest the only game. After all bonds CDs, savings accounts, and other vehicles generate to fixed interest rate not more high enough to fight inflation back. Unfortunately the year that ten market bear, began in early 2000 and lasted until 2010 has shown that stocks are also only a few reliable.
Means in the long term safe step short
The truth is that the stock market an excellent long-term investment is a little ugly or short term. The average annual yield of the s & P 500 since 1 January 1980 until 31 December 2011, was 12.61%, or annual growth rate made true 11.10% while return annualisierte. This means that $1 invested s where & P 500 in 1980 would grown in 2011 at $29.02.
The problem is that it was close to astronomy as the loss of the s & P 500. In 2008, the index has fallen incredible 37.22%, and in 2002, he fell 22,27%. The good news is that after each of these cases, the s & p restored period of two years. There is also a period between 1991 and 1999, in which the s & p is not to lose money in a single year.
Statistics show that the stock market for short-term investments, but a great place to make money in the long run is too volatile. This course brings people to invest for retirement in a real dilemma, the public the best investment in the long term Autour but it so volatile is that it not for short term gain.
Safe to invest in shares
Fortunately, there are a few ways that investors can benefit from the potential winnings from the stock market, and at the same time the risk. In the last two decades have investments and the insurance industry make safer to grant, some vehicles developed.
Index invest s & P 500 mutual funds or exchange of traded funds in stocks such as indexed. Investment in the long run of these indices is a constant performance. As we can see unfortunately saw disastrous losses in the short term subject to by index.
Variable and indexed pensions included a traditional fixed annuity provides steady income and a sub account invested in the stock market, usually through an index. The advantage of these mechanisms is that all profits of the stock market in the pension can be reinvested. In this way, you can assured his and get and increase the amount of interest, earn a capital available. Another advantage is that these vehicles are tax-free.
There are also indexed pensions have mechanisms of insurance that the profits is blocked. If the offers s & P 500 12% back, one year and the mechanism or rate of return guaranteed a loss of 5% the following him locked in the rate of return of 12%.
Finally, deferred variable annuities allow to people to save for retirement with the stock exchange and to take into account the interest. The two types of investments are tax-free and the pension itself is insured and guaranteed by the Governments of the States. Additional protection and a better way can invest in the stock market.
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