Indexed annuities have received a lot of hype in news. The news is slowly getting more positive as people are finally beginning to understand that stocks do not always just go up. It is amazing how deep a belief can take root even if it is irrational. The Tech Bubble popped and it still took almost ten years for people to realize that stocks and mutual funds can be very volatile. The go up in value but they go down in value. The recent volatility is a warning and a solid reminder that markets are volatile.
It makes sense in a way considering that most price changes are based on supply and demand. The more that is demanded the high the price is of the stock. It works a little like fruit at your local farmers market. If you owned a fruit stand and only had one bushel of apples you would be in a good position if you had lots of buyers. If you had thirty families trying to buy that one bushel you could raise the price significantly, perhaps even 300%!
But if you only had one buyer and they were thinking buying oranges from the stand next to yours you might want to lower the price to make the sale. The market is more complicated but basically works the same. This is some of what Facebook is experiencing with their decrease in stock price from their IPO.
Indexed annuities protect against loss and provide a good return. In other words, you will earn a good return and never have to worry about losing money again! That is where the hype comes from and it is not hype. It is actually true but there are some details.
To learn more about the details of indexed annuities read - What Are The Downsides Of Equity Indexed Annuities?
To learn more about if indexed annuities are right for you read - Are Indexed Annuities Right For You?
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