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Recent Stock Market Turbulence and How to Deal with It

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Just last week, global financial markets were stirring. But this past Monday, August 24, 2015, it reversed. Minutes after Monday’s opening bell, the Dow Jones Industrial Average had a record 1,089-point decline. At closing, it had plummeted 588 points.

Likewise, the S&P 500 index formally entered correction territory. At closing, it had recorded a loss of 77.68 points, or a 3.94% decline. Both closings were the biggest reversal seen since October 2008.

Why the Changes?

The starting point stemmed from a slowdown in China’s economy. In July 2015, Chinese manufacturing reached a 77-month low. The manufacturing sector is a critical component of the Chinese economy. Earlier this month, China also surprisingly announced a currency devaluation.

Global investor fears over the economic slowdown culminated in a hard day for Chinese stock indexes. On Monday, the Shanghai Composite index dipped 8.5% -- overall a 38% decline since mid-June 2015. Volatile trade activity then erupted in the rest of global financial marketplace. High-volume sell-offs led to steep declines not just in the American stock market, but in European and Asian stock markets as well.

Prices for commodities, especially oil, also took a nosedive. On Monday, pricing for a barrel of oil fell to under $40 – a 33.3% decline from $60 per barrel in June 2015. As a result, emerging markets in Latin America and other regions – which are strong commodity exporters to China – were affected. They sustained losses in the form of declining currency, bond, and stock prices.

What’s the Takeaway?

Monday’s activity shows just how volatile the stock market can be. The 2008-2009 financial crisis is yet another indicator. From October 2007 to March 2009, the Dow Jones Industrial Average experienced a severe decline of 53.4%. Likewise, between December 2007 and December 2008, the S&P Index sustained a 37% dip overall, resulting in retirement account losses of $2.8 trillion.

When these stock market hits occur, it’s important to consider how much risk your portfolio should hold. Historical data shows market recovery will happen, but these recovery periods can take years – precious, valuable time for people who are retired or approaching retirement.

What are Solutions?

As people age, the importance of preserving wealth becomes greater. Part of that includes keeping your hard-earned money safe from the draining effects of market downturns. There are financial solutions available which allow you not only to protect your wealth, but have opportunities for tax-free fund growth.

One retirement vehicle which Americans are increasingly utilizing is the fixed index annuity. Since 1992, American investors have purchased almost $400 billion in fixed index annuities – and that number continues to grow. In 2014, fixed index annuity sales reached $47 billion – a 104.3% increase from $23 billion in 2004.

Here are some of the benefits of owning the right fixed index annuity:

• Principal protection
• Guaranteed income benefits
• Safeguard money from stock market volatility
• Potential for some financial growth
• Guaranteed death benefit
• Deferred tax liability
• Index linked growth opportunities
• Ability to lock in your principal and interest earnings

In short, many retirees and American workers have found solace in this financial vehicle. Among other indicators, fixed index annuity reviews showcase its value.

It’s important to keep in mind, too: There’s no such thing as a one-size-fits-all financial solution. Be sure of your long-term financial goals, determine how these fit into your retirement plan, and discuss the merits of any financial product with a qualified financial professional.

We can Help

Need help with formulating an income plan that generates an income you can't outlive? Or perhaps you’re at the stage of looking at different financial products for preserving wealth or supplementing your income. If you're ready for personal guidance, SafeMoney.com can help you.

Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

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Safe Money Broadcasting LLC.
1107 Key Plaza #450
Key West FL, 33040-4077
1.877.476.9723
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