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  • Writer's pictureManny

How to Protect Your Retirement Accounts From Market Losses


There are several ways to protect a retirement account from market losses. I you want to stay invested in the stock market, you have several options including:

  1. Diversifying investments: By spreading money across different asset classes, such as stocks, bonds, and real estate, an investor can reduce the risk of loss if one particular asset class performs poorly.

  2. Rebalancing: Regularly reviewing and adjusting the allocation of investments can help keep the portfolio diversified and reduce risk.

  3. Using stop-loss orders: These are instructions to sell an investment if it falls below a certain price, which can help limit potential losses.

  4. Investing in low-risk assets: Including investments such as bonds in a portfolio can help reduce overall risk.

  5. Investing in a professionally managed portfolio: A financial advisor can help manage and diversify investments to minimize risk.

It's important to note that no investment strategy can completely protect against market losses. It's essential to have a well-diversified portfolio and a long-term perspective.

Fixed Index Annuities (FIA) can be another option to consider when protecting a retirement account from market losses. FIAs are a type of annuity that links the growth of the annuity's cash value to an external market index, such as the S&P 500, while offering a minimum guaranteed rate of return. They can provide an opportunity for policyholders to benefit from stock market gains while protecting their savings from market losses, as they usually have a cap or participation rate that limits the amount of gain or loss.

FIAs offer a way to potentially earn higher returns than traditional fixed annuities, while providing the safety and guarantees associated with fixed annuities. They also often offer additional features such as riders that provide additional benefits such as lifetime income and long-term care coverage.

However, it's important to note that FIAs also have some limitations and complexities, they can have higher costs than traditional fixed annuities, and they may also have restrictions and penalties on withdrawals, making it important to consult a financial advisor before considering a FIA. It's also important to read the policy terms carefully, as some FIAs have restrictions on how much of the index gain is credited to the policyholder, and some have participation rates that are less than 100%.

Additionally, FIAs are not suitable for everyone and may not be the best fit for all retirement savings goals, it's important to understand that FIAs are not meant to be a direct substitute for stocks or other investments and they're not a way to invest in the stock market, they're meant to provide a balance of growth potential and protection of principal.

Finally, another option for protecting your retirement from market losses are Indexed Universal Life (IUL) insurance policies. IULs are a type of life insurance policy that also offer a savings component, where a portion of the premium payments go into a cash value account that grows based on a stock market index, such as the S&P 500. This cash value can be accessed via policy loans or withdrawals, the policyholder can also use the cash value to pay for life insurance premiums.


IUL policies may provide an opportunity for policyholders to benefit from stock market gains while protecting their savings from market losses, as the cash value account is typically capped or has a participation rate that limits the amount of gain or loss.


It's important to note that IUL policies have some limitations and complexities, they can have higher costs than term life policies, and they may also have restrictions and penalties on withdrawals, making it important to consult a financial advisor before considering an IUL policy.


It's also important to note that, like all life insurance policies, IUL policies are designed for death benefit protection first, and any savings component is secondary. Additionally, IUL policies are not suitable for everyone and may not be the best fit for all retirement savings goals.


For more information or to speak with one of our advisors, email us at info@copawealthstrategies.com or call us at (503) 217-4150.

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