I’ve had clients tell me the Guaranteed Lifetime Investment (GLI) was the “answer to all of their retirement concerns.” That’s a pretty big statement, which is why I want to tell you a little more about it…
The reason people love using the GLI as part of their overall retirement plan is because they get the benefits of the stock market without all of the “baggage” that comes with investing directly into the stock market. What I mean by that is, the GLI allows you to participate in market gains without the threat of market losses.
Let me explain…
People like the concept of the stock market because of the earning potential. But, as you know, that earning potential comes with a huge losing potential, as well. In retirement, that’s not exactly something you should be gambling with. However, just because it isn’t smart to solely invest in the stock market in retirement, doesn’t mean you shouldn’t have the opportunity to participate in the market. That’s where the Guaranteed Lifetime Investment comes into play in your retirement plan….
The Guaranteed Lifetime Investment can get you substantial returns with NO downside risk.
How Does The Guaranteed Lifetime Investment Work?
The GLI is linked to a specific index investment, and your returns are linked to the performance of that index. What you must understand here is that your money is NOT invested in the stock market. It is linked to the stock market through these indices. It is not invested in those indices or the individual stocks that they track.
For example, let’s say your GLI is linked to the Dow Jones Industrial Average. If the value of the index to which your GLI is linked goes up by 6%, then so does your account balance. If the index goes up by 8% the following year, then your account would go up by 8% as well. You get the idea.
Now, what about when the market goes down (as we have learned can happen overnight)?
What happens if one year the Dow Jones drops by 5, 20, or even 40%? That’s where the “guaranteed” part comes into play. With a Guaranteed Lifetime Investment, you are GUARANTEED to never lose. Ever. You won’t gain anything, but you won’t lose anything either. No stock you buy will ever come with the word “guaranteed” attached to it. That is why no person entering retirement should 100% rely on stocks to provide them stable income.
To put it simply, unlike traditional investments, your GLI account sits on the sidelines and waits for the market to rebound. Your account then grows by tracking the upside of the market, but never the downside, and your gains are locked in at the end of each year. Think of a car that is designed to avoid potholes in the road 100% of the time, guaranteed. Every time the car is in motion and it sees a pothole, it simply avoids it and the ride continues to be smooth and effortless. That’s sort of what it’s like to have a GLI in retirement—a smooth, safe ride.
This product was designed to give people the best of both worlds in retirement: stock market participation without the risk, and guaranteed income that has the potential to increase. The guarantees don’t stop there, though.
With some of these GLI products, you are guaranteed a minimum return on your account, regardless of market performance. Yes, that means that, even during a down year, your account still wins. It might not be a huge win, but a small win is better than a huge loss, right? A huge loss is what you can (and will) eventually face if you go the traditional route in the stock market.
Is There A “Catch” To The Guaranteed Lifetime Investment?
That depends what you define as “a catch.” There aren’t any hidden fees (like there can be with variable annuities), or some huge red flag that you should know about. The only “catch” here is that Guaranteed Lifetime Investments generally have a cap on the upside. That means that you can only earn so much with market upside.
In other words, if you want a contract that gives you that no-loss guarantee I was just telling you about, you may have to agree to a cap on earnings. The amount can vary from contract to contract, but let’s pretend that your contract has an 8% cap on earnings. If the market shoots up 25% one year, your account would rise in value by 8%, not 25%. Your account wouldn’t participate in all of the gains that year.
Is the tradeoff worth it? Does it pay to limit losses if that means you have to give up the full benefits of a raging bull market? The numbers say YES! 100%. It’s a good product for most people, and one of the BEST products for retirees. The proof is in the numbers, though, right?
To give you a general idea… From 1995-1999, we saw one of the greatest bull markets of all time. The stock market was the place to be. Now, fast forward just a bit to the two ferocious bear markets that kicked that bull so far down, it became just a little spec on Wall Street. Let’s say you invested directly in the S&P 500 at the end of 1991. In 1995, you would have had a 34.11% return. In 2008, you would have lost 39.23%. You tell me… Does that sound good to you?
Is a Guaranteed Life Investment Different From a Fixed Indexed Annuity?
I once did an experiment and described the Guaranteed Life Investment to a room full of people attending an investment workshop. I told them exactly how it works, much like I’ve done for you in this report. I then asked the question, “How many of you would like to be in that type of investment?” All I could see at that point was a sea of hands shoot up in the air. Every single one of them. The entire room said they found it to be an appealing investment.
I followed up that question by asking, “How many people here like annuities?” Only three hands went up. I then revealed to the room that the investment I had just described, and the one they had unanimously endorsed, was, in fact, a fixed indexed annuity. Crazy, right?
Have you ever heard the saying, “don’t knock it until you try it?” Well, you might be shocked at just how beneficial a fixed indexed annuity could be in your overall retirement plan. I’ve seen people shocked by this before. And, of course, it is very possible that a fixed indexed annuity would not benefit you in ways it benefits others. The only way to find out, though, is to do an analysis.
Set up your free strategy session right here on this page (scroll up—you’ll see a yellow “retirement strategy session” button on the right side of the page), or you can give us a call at 1-352-561-4571! Together, we’ll determine if your overall retirement plan can benefit from the fixed indexed annuity.