Yes, believe it or not, it's absolutely true. Last year, 79% of fund managers did not beat the S&P, the worst result in 15 years. These are the experts, the ones who wear flashy clothes and drive even flashier cars as proof that they know what they're doing. So if they don't have a chance, what kind of chance do you have at creating a solid financial foundation as you prepare for your retirement?
In order to beat their performance, you simply need to concentrate on financial products that provide a safe, steady growth. While this strategy might not make your portfolio explode in value, it can help provide a solid outcome without the stress of losing it all. To help you get started, we'll briefly discuss two such opportunities that will assist you with achieving your goals.
Opportunity #1: Annuities
If you want to achieve safe, steady growth for your retirement portfolio, it's hard to beat annuities. We've discussed annuities and their advantages in the past, but let's give a quick run-down for the uninitiated. Basically, an annuity allows you to place money into an account either all at once or in intervals of your choosing. Then, at a certain date determined by the agreement between you and the financial company, you will begin receiving checks each month (or all at once, if you prefer). It is even possible to set up an annuity so that you receive payments for the rest of your life.
Annuities are a great way to begin investing without a large amount of available funds. Depending on the financial institution you utilize, you may be able to open an annuity for only around $300, plus contributions of only $50. Some may be higher or lower, but regardless of the exact amount, you can typically contribute on your own terms. This flexibility is what many investors enjoy.
Opportunity #2: Indexing
If you were to bring up the subject with a seasoned stock market investor, they'd scoff at the idea. Why? Because indexing is, for lack of a better term, boring. There's really no excitement involved, and for those seasoned investors, they see it as a lesser option when compared to other products that offer a higher possibility of making money. However, with that possibility also comes a higher chance of losing a great deal of funds on a bad investment. To put it simply, indexing is for those who want to play it safe.
To begin, you'll want to obtain the assistance of a financial adviser who will give you a number of options, such as life insurance, certificates of deposit, fixed index annuities, etc. Once you have chosen a financial product or two, indexing will begin by attaching itself to the market index of those products. As that specific index increases, your own investment will increase as well. And if you choose more than one product to latch on to, your financial portfolio will be helped by diversification.
The great thing about indexing is a total lack of risk. While indexing allows you to make money by following a financial product's market index as it increases, you will not be affected by any decreases. While this might sound like a pipe dream, it's absolutely true. It's the way indexing is designed to perform. Just keep in mind that, as stated earlier, it can be a rather boring investment. But let those fund managers stick to the riskier products while you secure a solid retirement full of "boredom."
Source: http://firstsecurityfinancialshow.com/blog/bid/141653/79-of-Fund-Managers-Didn-t-Beat-the-S-P
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