We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • How Attractive are Our Safe Money Choices Today?

    February 5, 2012 by Sheryl J. Moore

    By Sheryl Moore
    AnnuityNews

    Since the United States stock market collapse of 2008, millions of Americans have seen their retirement savings dwindle. Many of these savers had their nest eggs exposed to the equities markets, and have subsequently suffered two periods of extreme losses in one decade. As a result, “safe money places” are getting a lot of attention. 

    So, what are safe money places? 

    Safe money places are vehicles that are used for the money that you cannot afford to lose; they’re products that provide peace of mind, knowing that your principal is protected from loss as a result of market fluctuations. Although some conjure up visions of fireproof safes and the space under their mattress when they think of safe money places, true examples of these products include: savings accounts, certificates of deposit (CDs), checking accounts, fixed annuities, indexed annuities and U.S. government savings bonds. 

    An alternative to a safe money place is a “risk money place;” a vehicle where you put the money that you can afford to lose. Risk money places offer the potential for much higher returns than safe money places. On the other hand, they do not guarantee that you will get back all of the money that you put in. (In fact, you may get back nothing!) Some examples of risk money places include: equities products, such as stocks and mutual funds, as well as bonds, commodities and real estate. 

    One must always remember the direct inverse relationship between risk and return when considering risk money products versus safe money products. The risk/return tradeoff dictates that, in order to realize greater returns, one must generally accept a greater risk and vice versa. 

    That being the case, how can people saving for retirement in today’s low-interest rate environment have the potential for greater returns, without having to accept the losses of risk money places? A thorough review of the potential for gains on today’s safe money places is warranted. 

    Although safe money products offered through banks are easily attainable, they are also crediting extremely uncompetitive rates today. Where some of these products offered rates as high as 10 percent after the turn of the century, not one of them offers a rate that exceeds half of one percent today: 

    • Savings Accounts: currently averaging 0.13 percent annually 
    • Certificates of Deposit: currently averaging 0.34 percent annually 
    • Checking Accounts: currently averaging 0.49 percent annually 

    U.S. government savings bonds have historically been a long-term safe haven for retirement dollars, offering credited rates as high as 6.31 percent (in May of 1995). Today, savings bonds are much less attractive: 

    • Series EE Savings Bonds: currently earning 0.60 percent
    • Series I Savings Bonds: currently earning 0.00 percent with an inflation component rate of 1.53 percent 

    Those using insurance companies as depositories for their retirement dollars have had the ability to earn as much as 20 percent or more in a single year over the past decade. Although current credited rates on annuities are dismal, these are the most aggressive safe money rates available today, relatively speaking: 

    • Fixed Annuities: currently averaging 2.86 percent annually
    • Indexed Annuities: currently averaging 3.32 percent for annual point-to-point crediting strategies 

    Given the lack of rate competitiveness on safe money products, what alternatives are available for safe money retirement accumulation? All of the safe money products that we reviewed offer a stated credited rate each year – with one exception… 

    Indexed annuities actually earn interest, subject to a limit (cap), based on the performance of a stock market index (such as the S&P 500 index). And while it is true that the average cap rate available on indexed annuities today is a far cry from the double-digit caps available just a decade ago, indexed annuity products offer the greatest potential for gains while also guaranteeing safety of principal. What’s more, there are indexed annuities with annual point-to-point caps as high as 8.55 percent available today! 

    Never mind that indexed annuities are the most competitive safe money choice available today, they also promise a guaranteed return of principal plus interest at the end of the annuity term AND a credited rate of no less than zero percent annually, ever! And if that gets your attention, you’ll be impressed with indexed annuities’ liquidity options, death benefits, tax deferral benefits and guaranteed lifetime income that cannot be outlived.

    That being said, it sounds like there is at least one safe money product left that provides the potential for attractive returns, without having to accept the losses of risk money places. Given today’s low interest rates on safe money, my retirement dollars are going into indexed annuities. 

    Sheryl Moore is President and CEO of Moore Market Intelligence, an indexed product resources in Des Moines, Iowa. She has over a decade of experience working with indexed products and provides competitive intelligence, market research, product development, consulting services and insight to select financial services companies. She may be reached at sjm@indexedrockstar.com.

    © Entire contents copyright 2012 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

    Originally Posted at InsuranceNewsNet on February 1, 2012 by Sheryl J. Moore.

    Categories: Sheryl's Articles
    currency