| What's the Catch? In most cases, the contract limits your upside when stocks go up. For example, Cincinnati-based Mass Mutual has a new index annuity called the American Legend 7 that allows you to earn up to 9% a year in the S&P 500 index. That means that if the stock market goes up 30%, you make only 9%. But if stocks drop, you lose nothing. It also offers you the chance to invest in gold with an annual limit of 12% on the leading gold ETF, SPDR Gold Shares (NYSE: GLD), and no downside risk. But if gold goes up 50%, you only make 12%. How do insurance companies offer this guarantee without losing money? Traditionally, they hedge their positions by purchasing 70% to 80% in high-grade bonds and government securities and then invest 20% to 30% in stock index call options or gold futures options. Financial experts have criticized annuities for being too expensive with hidden fees, which is something you need to watch out for. The Mass Mutual annuity charges 1.2% a year. It also has a built-in surrender charge that gradually declines from 9% to 0% in seven years. The annuity also offers a death benefit and a fixed income annuity feature. What is the real risk? There's only one: You want to make sure you buy an index annuity with an insurance company that will stay in business. Index annuities are not insured by the government like your bank account is. If the insurance company goes under, you could lose your investment. The key is to stay with top insurance companies rated A or better by AM Best or Standard & Poor's. MassMutual is rated A++ by AM Best and AA+ by Standard & Poor's. If you are 85 years old or younger, you qualify for the American Legend 7. Stock index annuities are not for everyone, but they may be suitable for part of your portfolio. For more information, contact Todd Phillips, the president of Estate Planning Specialists, Inc., in Gilbert, Arizona, at 888.892.1102 or email him at todd@epmez.com. You can also visit Estate Planning Specialists' website: www.epmez.com. I've known Todd and his father, David T. Phillips, for decades. They are reliable experts in all fields of insurance and estate planning. The Calming Influence of the Bible of Wall Street! During times of crisis, religious people turn to the Bible for comfort. Where do investors turn for comfort during a financial crisis? Many subscribers are turning to my classic bestseller, The Maxims of Wall Street: A Compendium of Financial Adages, Ancient Proverbs, and Worldly Wisdom. It even has quotes from the Bible!  | | Yours truly and a subscriber cruising with The Maxims of Wall Street. | | View larger image | | |
Demand for my book has been especially strong with the market turning south. It's now in its 12th edition. I've received several letters from investors lately who say that reading quotations from Maxims has been comforting in these trying times when the market is struggling. I've been around the markets since the 1970s and have endured many crashes and busts. It never gets easy. Warren Buffett recently wrote, "The stock market can go from green to red without stopping at yellow" (see Page 111 of Maxims). He's a big fan of my book. And consider this quote from Wendell Brock: "Nothing can make the spirit fly higher than finding a bargain when you're the buyer. And nothing can make the spirit sink deeper than finding it later a whole lot cheaper" (Page 34). J. Paul Getty advised, "Owners of sound securities should never panic" (Page 111). This quote comes from Oxford Club Chief Investment Strategist Alexander Green on why you should stay invested for the long run: "It's tough to catch the train after it has left the station" (Page 177). He considers my book a "classic." And last but not least, there's Dick Russell's famous line, "In a bear market, the winner is he who loses the least" (Page 108). If you want a copy of the new 12th edition, go here. The price is only $22 for the first copy and $12 for all additional copies (they make great gifts). If you buy a box of 32 copies, the price is only $337, which is just $10.50 apiece. I sign all books and mail them at no extra charge inside the U.S. Economist and financial analyst Dennis Gartman says it best: "It's amazing the wisdom one can gain from just one line in your book. I read it every day." Good investing, AEIOU, Dr. Mark Skousen | 
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