Today the market plunged for a second straight session, with the DowJones Industrial Average dropping more than 1,400 points and the S&P 500 Index enduring its steepest single-day decline since August 2015, erasing its gains for the year. One way to avoid all of this volatility is to use a Fixed Indexed Annuity (FIA).
There is one FIA on the market from an A+ rated company that allows you to be linked to 160% (age 65 and under) of what an index gains without the risk minus a 1% spread. This is called a participation rate so if the index gained 10% the contract would lock in 16% minus the spread. Use your age as a percentage and that's the percentage that should be in things that have guarantees of principal or income or both.
This is a great vehicle for someone who is not seeking income but wants to preserve principal and still participate on the upside of the market. There is no other fee if no rider is added. If you're over 65 then the participation rate would be 150% and the surrender period would be shorter.
This strategy is one of the best ways to participate in the growth of the market without the risk associated with it.