Deciding on whether an annuity is right for you is a significant decision. Many people choose investing in stocks over annuities. Lets be clear stocks are not annuities and annuities aren’t stocks. This week the stock market suffered its most significant drop in history. For those investors fully invested in the stock market, obviously is was not a good day. Declines and market corrections are very much a part of the stock investing landscape. It is part of the business although many investors try to ignore the obvious and still be on an economy watch .
stock market will suffer declines and along with so will your portfolio. If you are able to ride out these declines where you can potentially lose thousands of dollars over the course of a day, carry on.
Two things generally happen when the stock market corrects. Either investors sell and hold cash to reinvest at a later date, or they hold and hope for a bounce. This creates a buying opportunity or a time to reevaluate your investment strategy?
Conversely most annuity owners have quite a different thought on the black days of a market sell off. It is one of security and stability. Annuities can offer protection from market sell offs and provide a measure of sanity for times like these. Immediate annuities offer Interest rates and monthly payments that will remain constant. The insurance company that issues the policy makes those guarantees. That generally feels much better when the rest of the investment community is in a state of panic as stock market order takers stumble over one another to sell off their clients holdings.
Each investor has a tolerance threshold in matter of risk. Each investor should define that threshold before investing in any investment vehicle. Deciding to hold both stocks and annuities is a viable option and an option used by many. The economy is not on solid ground nor does it look like it will grab a foothold in the near future. Asset allocation is paramount to your success when planning your future. It may be time to allocate a few more investment dollars towards investing in annuities. It may be a slower ride , but avoiding bumps in the road might be worth it.
