The stock market is fluctuating day after day due to the uncertainty of the corona pandemic, the conflict with Russia, and inflation. Investors are also anxious and afraid at the news of the market crash. Some investors can’t even sleep well. The money you put in the bank here also pays little interest.

He left his beloved hometown and immigrated to an unfamiliar and unfamiliar United States. He worked hard day and night without even having time to relax, and when the children grew up and looked back, the years passed without preparation for retirement. I have some retirement assets in return for my life’s work, but I’m not sure where and how to invest.

It is a valuable piece of money that a couple must live until their death after retirement. Find out which investments are safe and make money. This is probably the common sentiment of most investors. Financial companies are well aware of the desperate feelings of these investors. Therefore, annuity is a representative example of making and selling products.

A financial planner or an insurer describes Annuity this way: [Annuities with guaranteed principal have a unique characteristic. When the index of the stock market rises, it makes a profit proportional to it, and when it falls, the total amount that has risen by guaranteeing the principal is tied as the principal. This is because, when it rises, it preserves the profit, and when it falls, the principal including the increase in profit is guaranteed] Investors cannot but fall for this sweet temptation. Because it sounds like a ‘panacea for investment’.

Volatility or index annuities are invested in mutual funds (subaccounts). If your money is invested in mutual funds, you should consider whether there is any reason to invest through an insurance company. Investing directly in mutual funds can save you commissions and expenses. Also, if you invest directly in a mutual fund, you can know exactly who the fund manager is, what the past return is, where you are investing, and how much it costs, but it is not easy to know these details with mutual funds through financial products.

When the stock market goes down, it’s certainly not a pleasant feeling, especially in a rapidly falling stock market. However, 22 of the 36 past 10% declines were less than 104 days. A falling stock market is scary, but it means that the period of a down period is very short.
When looking at statistics on a monthly basis since World War II, the U.S. economy has declined only 14% of the month, and has risen 86% each month. Without the investment risk of a stock market decline, you cannot get a return on the stock market.

If you do not invest in financial products and invest in one stock made up of the 500 largest US companies (S&P 500), you can receive a high rate of return of 27.9% in 2021, 18.4% in 2020, and 31.5% in 2019 investment. The average annual average for the past 13 years is 16.03%. This is an incredible return on a $100,000 investment that has grown to nearly $700,000. Investors do not receive stock market returns because of commissions charged on financial products and high investment costs charged annually.

All investment, insurance and financial institutions exist to make a profit. Never a philanthropist. Companies make financial products to make money from investors, and those who sell these products also make a lot of money. This is why it is difficult for investors’ interests to become the number one priority. It is easy to find out by comparing the stock market return and the amount of money invested in financial products during the same period.

Ordinary investors often experience losses due to various wrong investments. While you are making money while you are young, investing mistakes can be very heartbreaking, but it can be a good experience. However, the investment mistakes of retirees without income lead to fatalities. This is because living expenses must continue to come out for a long period of time after 2 or 30 years of retirement. It should also be noted that the average lifespan of single female spouses is much longer than that of males.

To the first-generation immigrants who immigrated to the United States and lived frantically while raising their children, they advertise financial products like a “panacea” by saying, “You can guarantee the principal and receive a return on the stock market.” Investors should reconsider the phrase “too good to be true” before investing.

Myung-Duk Lee, Ph.D., Registered Investment Adviser (RIA)
248-974-4212

Copyrighted, Dr. Myung-Duk Lee’s Financial Column All rights reserved.

Author: MI Asian Staff