Investing versus Savings	back to home

You see below our spectrum of risk and return.  This spectrum is a simple way to view your retirement savings options.

Your retirement savings or investments are tied to risk tolerance and time. When would you like to retire?  When will you be needing this money? Tomorrow?  If you're 52 and plan to retire at 65, that's a time horizon of 13 years.  If you are already retired but won't be needing a particular portion of your savings for 5 more years, your time horizon is five years.

Again, savings versus investing -what's the difference? Savings vehicles always guarantee your principal and interest. The best vehicles for savings are CDs, treasury notes, treasury bills, treasury bonds, and fixed annuities. These products are designed for savings, for protection of your retirement savings.

Again, investment vehicles are market sensitive and, hence, never guarantee principal or interest.  Account values go up and down with the stock market and the economy. The best vehicles for investing are stocks and mutual funds. These products are designed for potential, but we must be able to afford the risk. Money you invest must be money you can afford to lose.

Retirement savings, our nest egg, force all of us to value the products designed for savings, due to the protection element and the guarantees built into these savings products.  When it comes to retirement savings, there is a natural bias favoring savings products!

Investment products force all of us to accept risk; you participate in the ups and downs of the market, the economy! Your account values will go up and down and are subject to a loss in value.

When we are in retirement, each individual must determine which portion of their assets they can afford to lose, and place only those assets into investments.  Dollars that need protection, guarantees of principal and interest, should be placed into savings vehicles.

Consider for a moment the following question. Wouldn't it be nice if we never lost money on our investments?  Wouldn't it be nice if our savings products had potential for even greater returns?  Fixed indexed annuities are an option to be considered, if you have become more conservative with your retirement assets, and you no longer wish to place your nest egg in the stock market. 

A savings product like the one described above is a fixed-indexed annuity.