Today the market was up overall about .50% or one half of a percent. That is a pretty decent return for one day. What if the market is up another half percent tomorrow? Is it time to lock in gains or just let it ride? It is a tough decision unless you make it a non-decision.
If you are in a variable annuity or any other variable type of investments there comes a time when you need to lock in your gains or just let it ride and hope for more gains. It is critical to get it right because a wrong move could be months or years with no returns or a declining investment with no hope of recovering. A right decision could leave you in great shape. Imagine owning 50,000 shares of Microsoft 15 years ago or McDonald's 25 years ago.
Not everyone can be so forward thinking or is even willing to risk in brand new start-up companies to win that big. So we invest in mutual funds and well known stocks. The same decision comes with those investments as well. As some point it will be time to lock in the gains or just let it ride.
While your mutual fund probably won't do as well as Microsoft stock did the decision is just as important to your future. How would you like to make it a non-decision? How would you like to lock in your gains each year and never worry about losing them or your principal? You would also have market like returns!
A fixed index annuity locks in gains each year. That means that whatever you earn you can never lose it and whatever your originally invested can never be lost either. You can invest in international indexes as well. It is a great way to invest aggressively and not be at risk of losing money.
Admittedly, annuities get a bad reputation. Before investing be sure to learn why and also learn about what to look for in an annuity.Lock in your gains or let it ride? Why not both?
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