I am not a big gambler, but I have enjoyed an occasional trip to the casinos in Vegas. My wife goes with her girl friends almost every year. And from time to time she has returned with more money that she left with. But we tend to lose as well. The ultimate outcome from one experience to the next was determined by when she took her money off the table.

Over the past 20 years, the S&P has gone from 400 to 1200 for an average annual rate of 5.46% pre tax. That, of course would be enhanced by dividends and reduced by taxes and expenses. Other 20-year examples come out similar and some look better by a percent of two. You can decide what rate of return you is appropriate from your stock investments. But the most important factor that determines your investment results is…WHEN YOU HAVE TO START TAKING YOUR MONEY OFF THE TABLE.

Interest rates have historically averaged 4.9%, Clients who invested for the past 20 years would have poorer results as the S&P, but without the angst. Bottom line; a good balance of fixed and equity investments will yield very respectable results with much less volatility and stress.

Those who understand them know that Index annuities are a great way to invest the fixed portion of the portfolio. They are one of the financial sector’s fastest growing financial instruments for a reason. They don’t go down. And when they go up, they can typically enjoy a similar increase to the market except in the “big gain” years; and they don’t cost near as much as a Variable Annuity (VA). They also have Guaranteed Income Riders equal to, or better than VA’s at half the price.

My advice? All of you (Ok, maybe not everyone) who owns a Variable Annuity should exchange the less volatile portion of the asset allocation into an indexed annuity. And clients who are considering a VA should also have the opportunity to choose an Index Annuity. Call me for additional information. And click here for a very good explanation of the basic crediting strategies.