The following chart assumes an index that was up 11% in the first year, down 1% in the second, up 10% in the third and up 19% in the fourth*. It then compares the final value of an initial $100,000 using those first four returns with the index in year five dropping 20% and 30%, against an annual reset approach that has a 5% cap and treats negative years as zeros.
*If those returns look familiar it’s because they were actual S&P 500 returns for the last four years
This is not a prediction of what will happen, but only a reminder that there always is a next year. Often it
makes sense to preserve what you have, rather than concentrate on what you might miss.
Copyright 2018. Prepared for AMS by Advantage Compendium, Ltd for educational purposes only. Neither AMS nor Advantage Compendium, Ltd. provides investment, tax or legal advice. Information believed accurate, but is not warranted. Any views expressed are not those of AMS. Reproduction is not permitted without written permission. Past performance is not an indication of future results. “Standard & Poor’s” and “S&P 500” are trademarks of The McGraw-Hill Companies, Inc. and must be licensed for use. Standard & Poor’s does not sponsor, promote, or make any representation regarding any index product. Information is from sources believed accurate but is not warranted; we do not provide investment, tax or legal advice. Both investments and fixed annuities involve certain risks; a consumer should consult with their advisor or agent. Fixed annuities are not bank instruments and are not insured by FDIC.