How do I protect my retirement account from stock market losses?
In the Video above, Scott Farnsworth, Central Florida's Tax-Free Retirement Expert answers a frequently asked question: How do I protect my retirement savings from stock market losses?
"You can work all your life and put away a lot of money for retirement and it can all be wiped out in an instant through a stock market crash. In just the last few years, we've seen a major crash in 2000 and then another major crash in 2008 and many people who thought they were going to retire comfortably are not going to be able to anymore.
What can you do? Because most retirement money is in the stock market in the form of mutual funds inside of 401k plans, IRAs, and even Roth IRAs. You can move your money to an interest-bearing account but you're going to get 1 or 2%. That's not going to be enough for you to retire comfortably. I recommend the TRA which uses an indexing investment strategy. You get a good market rate return and 0 stock market losses. That's because they use a cap and a floor. As the market goes up, you receive a portion of the up side of the market, in many cases about 11 or 12%. If the market goes down, you stay locked in. Your earnings to date are safe. You never go below 0. Over the lifetime of the TRA, you might average around 7 or 8% without ever going backwards."