Scenario: Market volatility can make even the seasoned veteran investor weak in the knees. Younger investors know there is time to ride out the down times and recoup a loss with a longer investment horizon. Recently, however, we had a client in his early 50s who had been through several market downturns and managed to rebuild his IRA. His investment horizon is now about 15 years, and his tolerance to volatility greatly diminished.
Problem: Client had retirement assets split between Traditional IRA and 401(k) plan. The traditional IRA was in an aggressive portfolio investing in mutual funds and EFTs via an algorithmic computer investment service. Recent losses (coupled with unknown political and environmental factors) made him uneasy, and he realized that he was not willing to accept this volatility again. He was seeking greater stability for at least a portion of his portfolio.
Solution: The ideal resolution for this client (and many like him) who want to guard against loss, participate in potential gains, yet secure future retirement benefits was key. We focused on Annexus* and the index-invested products using JP Morgan Mozaic II Index and NYSE® Zebra Edge® Index funds. The contractual benefit of zero loss, provided the investment stayed in place for the agreed upon time, was the first and most compelling reason for the decision. The addition of guaranteed income at retirement age, gave him the peace of mind well beyond what the traditional IRA ever could have offered. He was also able to name his spouse and children as beneficiaries.
Outcome: The client and his wife have benefitted from a simple plan and are grateful, and we are grateful to be able to assist our wonderful clients.