AboutDavid M Iannopollo Expertise I am a professional financial advisor who can assist you with answers on mutual funds, annuities, IRA's, rollovers, qualified and non-qualified retirement plans, retirement planning, educational planning, life, disability and LTC insurances.
Experience I have over 20 years experience in the business and financial world.
Question Hi Dave,
I'm 62, married and receive $16,800 in annual retirement benefits. I have $10,000 in savings and $10,000 in a CD which will mature in Dec. 2009. My risk tolerance is zero -- lost too much in portfolio investments in the downturn. What's the best way for me to safely invest, earn good returns and access my money without penalties, etc. IRA, CD, or what?
Thank you.
KATE
Answer Hi Kate,
This is a good question and one that many retirees are asking nowadays. Being that interest rates are so low, your not going to get any type of a return with a CD or money market. On top of that, the interest on these accounts is taxable which eats away at an already paltry rate of return.
Depending on how much access you need to these funds, a fixed or fixed index annuity may be a good choice for you. A fixed annuity will guarantee you a higher interest rate than a CD for a specified number of years. Interest is not taxable until withdrawn and depending upon the product you can access 10-20% of you funds annually with no penalty or surrender charge as it is called with annuities.
A fixed index annuity will credit interest rates that are linked to an index such as the S&P 500. They will have a cap as to how much interest you can earn but they will guarantee that you can not have a loss in any given year. So for instance, if your cap is 8% and the S&P does 8% or higher, you get 8% credited to your account. If the S&P has a negative return, your account will not be credited with any interest but you will not lose anything either. So you have the opportunity to earn a high interest rate, but you can not lose any of your principal or any gains made along the way. These are great products to the totally risk averse like yourself.
If you would like more info, feel free to contact me at the email below. Good luck!
