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Patience pays with your investments

Posted: March 7, 2008 1:04 a.m.
Updated: May 8, 2008 5:02 a.m.
When it comes to investing, patience can have its rewards. In fact, for the 10 years ended December 31,2006, a hypothetical $10,000 investment in Standard & Poor's 500 Index would have almost doubled to $19,147. However, if during this time frame, the investment would have missed:

* The 30 best market days, the $10,000 would have lost more than 40 percent of its value and declined to $5,902.
* The 20 best days, the $10,000 would have decreased to $8,224.
* The 10 best days, the investment would have grown to $11,937, $7,210 less than if the $10,000 was held for the full 10 years.

In this volatile market we are currently experiencing, one of the best ways to help you stay the course is finding an investment adviser who shares your long-term perspective and will help you tailor a plan that fits you and your long term retirement goals. Once you have established a long term perspective and portfolio, then you will have better piece of mind with current circumstances affecting the economy. Remember the old adage, "Never try to time the market." Evaluate your options, make a decision, and stay the course.

One of the best ways to protect your nest egg income and assets from volatility was discussed recently in an article about seniors and their investment planning involving Variable Annuities. Variable Annuities have a unique feature and rider that no other investment offers that I am aware of - guarantee of principal, guarantee growth for future income and automatic step ups when the market outperforms the guarantee. Most of the few life insurance companies that can afford to offer these income riders provide options of lifetime guarantee income for one or two joint annuitants, no matter what happens to future contract values. It's a unique investment option for the retiree who wants to be assured of income, stay fully invested in the market even in later years to take advantage of the upside of the market, and protected from the downside.

One company calls the critical five years before and after retirement the "Red Zone" when volatility can have a dramatic effect on your nest egg and its potential to give you that planned income when you no longer can or want to work. Talk with your financial adviser who is familiar with the many options and differences of the companies that offer these special riders. It is imperative to fully understand the workings of these riders and how they can affect your future income. The liquidity is limited and you should be sure you can accept the terms and have a long term perspective for your retirement planning. I firmly believe that these products and riders have a place for some portion of assets in almost everyone's portfolio for retirement.

Jim Lentini, CLU, ChFC, IAR, is president of Lentini Insurance & Investments Inc. His column represents his own views, and not necessarily those of The Signal.


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