Stock Market Gains With No Risk to Principal by AnnuiWeb.com

**by Chris Lepley, AnnuiWeb Editor

The stock market has seemed very risky these days - that's not a news flash for anyone. All investors know the maxim "buy low, sell high" and while the opportunities to buy low are plentiful, with some big name stocks at their lowest points in years, investing in individual stocks can be even riskier. The question on everyone's mind is whether the markets have reached their ultimate low and will now rebound or whether there will be further losses. What if you could take advantage of the low market buy-in without putting any of your principal at risk? What if you could even make a guaranteed minimum return on your investment, no matter what the market does? What if you could capitalize on a market upswing without placing your potential gains at risk? Equity-Indexed Annuities can give you all those things. You get to walk the high wire of potential gains, and if the market falls, you get a safety net so you don't follow it to the ground.

Equity-indexed annuities are annuities whose interest rates are linked with an equity index, like the Dow Jones Industrial Average, the NASDAQ or the S&P 500. The performance of the annuity is based on the performance of the index, except in the case of negative returns. The equity-indexed annuity, which has become extremely popular, can offer a share in the profits of a bullish market, while protecting against loss of principal or past gains. This means, in a nutshell, that if the market loses money, you don't. If the market has a year of negative returns, you not only don't lose, but you gain at a guaranteed rate. Hands up who thinks +3% is better than -3%?

In the late 1990s, when the market was doing extremely well, consumers shied away from equity-indexed annuities in favor of more open-ended mutual funds. This meant that consumers took all the gains but also took all the risk. With an equity-indexed annuity, you participate in either a percentage of the gains or take all the gains up to a cap (the formula varies from product to product). This means that in a year of vast growth your gains would be less than if you owned a mutual fund. However, because equity-indexed annuities have a guaranteed rate of return which protects your principal, you never have the kind of losses you experience with mutual funds in a year when the markets go down. As we enter our fourth straight year of negative returns in the equity indices, the protection against loss of principal and the promise of guaranteed returns is making equity-indexed annuities the preferred product for retirement savings.

There are some great deals out there, and now is the perfect time to "buy low"! No other retirement savings product offers a guaranteed return plus an opportunity for capitalizing on an upswing in the market. You can "buy low" with an equity-indexed annuity, and participate in a market upswing, all without risking your principal and gains. Now THAT's what you call a safety net!

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** AnnuiWeb is a financial information site designed and maintained by journalists to provide interested consumers with information about annuities and related financial topics. AnnuiWeb is not an annuity sales website. Our goal is not to sell annuities, but to provide consumers with the information they need to make informed decisions about annuities. .

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