“Bulls make money, bears make money, but pigs get slaughtered.”

Wouldn’t you agree that the market will either go up, down, or sideways? So now let’s look at a 10-year period of time, and we will pretend to make a one-time deposit of $1,000, and the market will alternate between a 10% gain and a 10% loss every other year with the first year going up by 10%. If this happened, you would think that the result would be zero at the end of the ten-year period. However, the actual return would have lost -4.9%.

We would have ended up with about $951. You must understand that the average return and the actual return will never equal one another if there is ever a negative year in the equation. The difference is managing your losses! (It’s important you understand the following two pages!)

Please study the two charts on the next page; which position would you rather have your retirement account be positioned in? Again, we believe you will create more wealth by managing your losses versus chasing after higher returns. You have probably heard the old saying, “Bulls make money, bears make money, and pigs get slaughtered!”

“Today is Friday… but your finances aren’t going on vacation.”

Let’s compare this scenario to one in which we have the same gains and losses, but we can eliminate all of the negative years and capture (protect) each of the positive year’s gains. Look at the difference. The worst year is zero, and even though only five years had gained, the initial $1,000 grew to $1,610. That, my friend, is a 61% gain in a market that had five years of ZERO returns. Zero can be your hero! It’s not exciting, but you never suffer loss.

This is the miracle of having your money insured from ever suffering a loss or paying a fee.

Do you see the advantage of risk management? Do you now see why it is so important to have your retirement accounts insured? Oh, you didn’t know you had this option. Well, you do, and you can get it done without cost!

Tommy L. Ruff, CLU© ChFC©
Strategic Financial Consultant