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How To Get All The Market’s Growth In Retirement

If you could get ALL the market’s growth, wouldn’t you want it? Sounds good, right?

But what if there were a downside to all this?

There’s always a trade-off with anything in life. We understand the old cliché that you “Can’t have your cake and eat it too.”

The same applies to investing, and especially investing in retirement.

One of the most popular products designed for retirees today is the Fixed Index Annuity. The main benefit of it is you can’t lose money in the market, but you get to participate in some of the upside when the market rises.

You can see the trade-off with this arrangement. You get some of the market upside. The benefit is you get no downside.

This is a reasonable trade-off for many retirees for a portion of their portfolio. This is primarily a good trade-off for many retirees because protecting their investments becomes even more important as they near, and enter, retirement.

But what if you wanted ALL the market’s growth? Let’s talk about that. Specifically, let’s answer the questions:

  • How do I get all the market’s growth?
  • What are the downsides that come with getting all the market’s growth?
  • What type of investing time horizon should I expect to get ALL the market’s growth?
  • Does it make sense for me to structure my portfolio in this fashion?
  • What are some alternatives to investing in retirement that do not involve getting ALL the market’s growth?

Let’s get started.

Passive Investing – Getting ALL The Market’s Growth

The way to get all the market’s upside is to be passively invested in the market. This means you buy and hold and do not trade. You can do this through low-cost mutual funds and ETF’s (Exchange Traded Funds) that track different indices.

Index funds are specifically designed to closely match the changes of an index. Since you can’t invest directly in any index, such as the S&P 500 index, the next best thing is to find an index fund whose performance closely matches what the S&P 500 does.

This way when the S&P 500 index goes up, then your index fund that tracks it goes up in almost the same amount.

In other words, you get the market’s growth.

Of course, “the market” is not just comprised of the S&P 500 index. That’s just 500 large-cap domestic companies’ stock.

The market also includes other investments. There are other equities available as well, for example:

  • Small-cap equities
  • Mid-cap equities
  • Foreign equities

Not only that, but the market also includes other non-equity investments, such as:

  • Investment Grade Corporate Bonds
  • High Yield Bonds
  • U.S. Treasuries
  • International Government Bonds

And there are alternative asset classes also, such as:

  • Commodities
  • Real Estate

So if you wanted to get all “the market’s” growth, this may include buying index funds that track these different asset classes.

All The Market’s Growth And All The Market’s Loss

The downside to passive investing (buy and hold on), is that you will also get all the market’s loss. If you passively held on to an index fund that tracked the S&P 500 during 2008, you got all the market’s loss. From its high in 2007 to the low in 2009, that would be a loss of approximately 50%.

It’s important to note, when we’re in a bull market, everyone wants to get all the market’s growth. But when the bear market comes along, suddenly “market performance” just doesn’t cut it.

But Doesn’t The Market Always Come Back From A Crash?

This is a legitimate question. And we can look back historically and see that typically the market comes back in the long-term.

But what exactly is “long-term?”

In other words, how long does it take for the market to reach back to its last high point?

It’s pretty simple to go back and see.

Dow Jones market growth


In August of 1929 The Dow Jones stood at 5,212. After the crash and Great Depression of the 1930’s it took until June 1959 for it to reach 5,244. That’s just 2 months shy of it taking 30 years to come back to its previous high.

Then it reached a new high in October 1965 of 7,187. After some ups and downs, it didn’t reach that high again until August of 1995 at 7,151. That too is just 2 months shy of 30 years before it reached its 1965 high again.

Even in recent history, from its high in January 2000 of 15,371, it took until September 2007 to reach that high again. However, it immediately began a downward trend and did not recover again until July 2013 at 15,732. That’s an approximate 13 year period, just to reach its previous high point.

And you can look at other indices for more recent periods as well to see a similar pattern.

Here is the recent historical performance of the S&P 500 from Google Finance:



This is showing the period from March 28th, 1991 up until March 31st, 2016. 

From the March 2000 high of 1,527 the trend was down. It rebounded by July 2007 at 1,534 only to begin another downward trend that occurred in the 2007-2008 bear market. It rebounded back to previous highs again in March 2013. So from March of 2000 to March of 2013, that is 13 years of movement just to get you back to the same place.

So over the long-term the market does typically come back. But it is obvious the price every passive, buy-and-hold investor has to pay. They have to be:

  • Committed through the large downturns and not liquidate their holdings.
  • Comfortable with having decades go by with no growth, because they know that over the long-term the bull market years will very likely reward their patience.

Historically, we have seen how the Dow Jones took approximately 30 years at some points to reach its previous highs again. And with the S&P 500 in recent history it spent 13 years bouncing up and down just to get back to its highs from the year 2000.

For many retirees, this is unacceptable. Many people’s retirement may last 30 years. Do you potentially want to spend your retirement waiting for your buy-and-hold strategy to get you back to break even?

Retirement Investing Solutions

All is not gloom and doom. A couple of points about the above examples need to be mentioned.

I’m showing the historical results of what the S&P 500 and the Dow Jones did. A properly diversified portfolio should have other investments in it as well, like bonds, to help smooth out the results.

But it does illustrate the point that when you near retirement it is important in many cases to reduce the volatility in your investments. The “long-term” can be longer than many investors realize.

And what happens is that many people will approach investing saying, “Buy and hold is the best thing for everyone to do,” but as soon as the market has a downturn they panic and sell out.

This is, unfortunately, a very common investor behavior.

It’s easy to stick with a buy-and-hold strategy when everything is going well. It’s harder when the market has a crash or correction. And it’s especially harder for many retirees who want to help protect their portfolio.

One way to help have smoother results for retirement investing, and I just mentioned this above, is to be properly diversified. And as you near retirement, many retirees may want to have more exposure to less volatile asset classes like bonds.

Another way to help manage your investments for retirement is actively preparing for the reality that you will very likely be making withdrawals from your portfolio for income purposes. This is where fixed annuities come in. They can be used for guaranteed lifetime income. They can also be used as an account to make as needed withdrawals from, knowing that the account value will never decline due to market forces

And still another strategy is to use tactical asset allocation. That’s just a big word for having the investment freedom to decrease your exposure to certain asset classes that, for the time being, are not in your best interest to be as fully exposed to. This can help. Especially when the buy-and-hold crowd is “holding” all the way down.


Investing for retirement is different than investing for someone just entering the workforce. Principal protection becomes more important. And the “long-term” may be longer than many retirees care to wait to see if their investments reach back to break even highs after a crash.

To help you with your retirement investing, download the free ebook “Top 7 Investor Mistakes Baby Boomers Make With Their Portfolios… And How To Help Avoid Them.” Just click here.

It will help you do exactly what its title says. And this will help you to have a better investing plan, which ultimately will help you have a better retirement.

And that’s what it’s all about, right?

Warmest regards,



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Investment Advisory Services offered through Retirement Wealth Advisors, (RWA) a Registered Investment Advisor.  Tri-State Financial Group, and Tri-State Insurance & Financial Services, and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.

This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Tri-State Financial Group and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Retirement Wealth Advisors. Chris Hammond is insurance licensed in TN.