Hybrid Indexed Annuities Balance Market Volatility in the Wake of Brexit

Hybrid Indexed Annuities Balance Market Volatility in the Wake of Brexit

There is some good news for investors in the wake of all this market fluctuation: Downturns don’t necessarily require panic. This is especially true if you are working within a well-diversified investment structure that considers your future needs and your personal investment and financial planning approach. A recent article in Time Magazine cites the market’s historical performance as a source of comfort with regard to our current situation:  “Back in March 2009 the Standard & Poor’s 500 was down 40%, but the market rebounded and delivered a historic bull rally.” This is all the more reason for investors to stay invested and remain diversified. In fact, this turn of events might actually afford investors an opportunity to increase their financial security.


While the wake of Brexit has been stressful on financial markets globally, it also marks an instance in which Goldstone Financial was able to use targeted strategies to make clients’ money work for them in order to actually strengthen their financial portfolios. Specializing in retirement security, Goldstone works with clients to balance active investment strategies with a conservative approach, which helps ensure financial security even in volatile markets. It’s in these downturns that we’re actually able to use our expertise to enable clients to participate in market gains, while still minimizing the risk of loss.

One aspect of this approach is using hybrid indexed annuities to help balance market volatility. Hybrid annuities are a staple in our investment approach throughout all types of market performance, but as it turns out they have been especially beneficial of late. And, according to a recent Financial Times article, “In the longer term, some of the stringent EU rules on the amount of capital that insurers have to hold to support their annuity may be relaxed ever so slightly and this will be good for annuities.”

Goldstone Financial specializes in hybrid indexed annuities, and recommends them in part because of our vast experience, and strategic approach. For example, we always participate in multiple indexes at a time, thus reallocating the risk of loss and maximizing the potential for gain. The “cost” of this, and annuities in general one might argue, is that there is a cap in the potential gain. However, our research and experience has shown that clients above a certain age who are looking toward retirement would rather be guaranteed a gain, than risk having none at all. These gains also offer flexibility of when they are credited to a clients’ contract—on a monthly or annual basis—so there is a sense of control on the part of the investor, which is extremely reassuring to our clients who no longer have a steady stream of income.

As with any investments, these are best executed and maintained with consistent tracking, customization, and navigation of limitations in accordance with clients’ need and future goals. It’s best to enlist the help of a professional who can navigate these variables, to help provide the best return on performance as related to the overall larger investment and financial planning goals for each client.

There are several other recommendations we make to clients who are concerned about their finances during Brexit and other difficult times in the market. Smaller cap options are looking better and better in the wake of Brexit, causing many to continue this course of action if already implemented. Reactionary investors have been pushing money into exchange-traded funds that track the price of gold and various indexes within bonds, but we recommend maintaining a longer-term strategy, even for our clients closer to retirement.  

The best approach, however, is to remain calm and avoid making rash decisions during market events that will likely correct themselves. U.S. New & World Report reminds us that “investors who make sudden decisions to sell their assets may face transaction fees and negative tax consequences, and perhaps most importantly, they will not have the opportunity to regain these assets when the markets inevitably recover.” These are serious consequences that aren’t always considered in a panic. In a CNN article on the subject, Tobias Levkovich, chief U.S equity strategist at CitiBank, also cites that “trading on emotions generally is not a smart reaction to unexpected developments, and the U.S. has shown itself able to grow its economy even when Europe slipped into recession.”

Regardless of comforting predictions and expectations, these sudden changes bring on understandable stress. At Goldstone, we attempt to alleviate the pressure of these situations for our clients, precisely so that they don’t have to risk making damaging decisions in high-pressure moments.

Goldstone Financial Group: How Investing in Annuities Can Boost Retirement Confidence

Goldstone Financial Group: How Investing in Annuities Can Boost Retirement Confidence

According to the Employee Benefit Research Institute, 37 percent of workers are confident that they have enough money saved up for retirement. The EBRI’s 2015 Retirement Confidence Survey reveals confidence about having enough money for retirement has increased steadily after reaching record lows between 2009 and 2013, but today’s numbers reveal that less than half of working America is still unsettled or even anxious about their financial future.

Fortunately, there are several attractive options available for soon-to-be retirees. Those who are within a decade or two of retirement may be especially interested in purchasing annuities, which can be a valuable addition to retirement planning.

What Are Annuities?

Annuities are a unique type of financial product because unlike savings and investments you would set up with a bank, annuities are sold by insurance companies and financial institutions. When you buy an annuity, you are socking away money for a few years that you don’t expect to touch until the surrender period — the length of the annuity — is over. Although, most annuities allow up to 10% to be withdrawn annually during the surrender period.

One of the reasons why people buy Fixed Indexed Annuities is because they are looking for a no-risk or low-risk investment opportunity and want to protect their hard-earned money from income taxes. If you have already made your full contributions to 401(k) plans and IRAs and have some extra money available for retirement, you may consider purchasing an annuity. You can buy an annuity for several thousand dollars and earn tax-free interest as long as you don’t make any withdrawals during the surrender period. Of course, you will need to consider the fee structure and overall cost of your annuity before signing the dotted line. In many cases, annuities earn higher interest than bank CDs and savings accounts.

Generating Income with Annuities

You get to play investor when purchasing annuities and can choose from several different types — including multi-year fixed income annuities (MYGA) where you receive a guaranteed payout or a variable annuity where you receive a payout based on performance. Variable annuities, naturally, are riskier investments but offer more attractive returns.

If you want to receive payments as soon as you make your investment because you are very close to retirement or are already retired, an immediate annuity will be your best option. If you are comfortable leaving your account alone to earn interest that you can enjoy later, you can purchase a deferred annuity to defer your payment to a certain time.

When exploring different types of annuities, it’s important to consider what type of insurance company is guaranteeing the plan, what types of costs are involved, and what stipulations there are for termination of your annuity contract.

As many Americans struggle with the idea of not having enough saved up for retirement or wonder if they will be able to get by on Social Security and pension funds during retirement, it’s never too late to start planning for the future. If you are looking for financial products for our retirement strategy, don’t overlook the benefits of annuities. Tax-free earnings and flexible buying and earning options make annuities an attractive option for soon-to-be retirees and those who are already in their retirement years.