Here’s Why You Want To Consider REIT Preferred Stock And Indexed Insurance Policies

In today’s tumultuous financial landscape, where markets swing like acrobats and economic uncertainties loom large, individuals are on high alert, searching for the most effective means to shield their investments from crippling losses and ensure a steady stream of income during retirement. 

With recession signals flashing, inflation charging ahead, and interest rates playing a game of seesaw, the quest for reliable retirement income has never been more pressing. Against this backdrop, two fascinating avenues emerge, each offering a unique blend of defense and financial gains even when the markets are down. Indexed insurance policies and REIT preferred stock take center stage as compelling options that strive to not only protect but also score financial points. These two options provide financial protection and reliable retirement income, even in challenging times.  

Here’s what you should know about them:

#1 Indexed Insurance Policies: 

Indexed insurance policies are an excellent means of safeguarding your principal while benefiting from market upswings. Insurance companies offer these policies, allowing you to “index” your investment and retirement portfolio. Essentially, you earn interest based on the positive performance of a stock market index. Thus in years when the market performs well, you can earn interest. 

Conversely, during negative market periods, you do not earn interest, but more importantly, you do not suffer any losses either. This ensures that your principal remains shielded against stock market downturns, providing peace of mind and a reliable foundation for retirement income.

Additionally, there are drawbacks as well. Indexed insurance policies can be complex financial products with various fees and charges. Indexed insurance policies also often have caps and participation rates that can limit the amount of interest credited to the policyholder.

#2 REIT Preferred Stock: 

Another avenue for generating stable retirement income is through REIT preferred stock, which combines the characteristics of both equity and bonds. REIT preferred stocks often offer higher dividends than REIT common stock, making them an attractive option, especially during high inflation. While REIT preferred shareholders may not have voting rights, they can benefit from investing in discounted issues. Typically callable between two to five years from the date of issuance, REIT preferred stock provides the opportunity for both income and capital appreciation. 

Additionally, owning “direct issuance” preferred shares, which are not subject to market volatility like common stock or traditional preferred stock offerings, can effectively secure consistent dividends of 6% to 8% annually without being affected by market fluctuations.

While REIT preferred stocks can provide a consistent income stream, they may have limited growth potential compared to common stocks. Investors seeking substantial capital appreciation may find that the returns from REIT preferred stocks are relatively modest.

By considering these two paths to reliable retirement income, individuals can actively protect their investments and enjoy financial stability even during volatile periods. Adapting your investment strategies to the current economic climate is important, and focusing on defensive approaches can help ensure a secure financial future.

It’s important to note that indexing and REITs have advantages and drawbacks. It may be beneficial to discuss all available options with a financial advisor who can assess your individual circumstances and help determine which option aligns better with your financial goals and risk tolerance. Additionally, a well-diversified portfolio may combine different investment options to balance risk and potentially enhance returns.