Professional Documents
Culture Documents
What would happen to your portfolio if you lost 25% on your safe bonds while the stock market corrects?
The yield on the 10-year Treasury recently closed at
about 2.40%, up sharply from its all-time closing low of
1.36% in July. Since bond prices fall when yields rise,
anyone owning longer term bonds has taken a big hit in
just two days after the election, for example, global bond
markets lost a collective $1 trillion.
If more of the same is ahead over the next few years,
many investors will be in a world of pain, especially
retirees, who could suffer 2008-style losses this time in
safe bonds.
The typical investor today has never experienced a
sustained rising-rate environment and they are
emotionally and historically unprepared for what
happens when interest rates go up 3% to 5%. Millions of
Americans, are engaging in a variety of risky behaviors,
often without knowing what theyre doing and could see
losses of 20, 30, 40 percent.
We will see more investment losses than we have ever
seen, partly because many Americans own these bonds
either directly or indirectly either through their
pension funds or their retirement accounts and more
people own bonds than own stocks. It is clearly
something that is going to affect every household that
owns assets in this country.
S&P 500
Duration
Account Value
Account Value
$500,000
$500,000
$500,000
$429,787
$500,000
$325,065
$561,994
$407,568
$585,749
$440,146
$594,011
$448,954
$632, 034
$505,609
$642,519
$518,399
$642,519
$313,705
$713,347
$384,145
10
$756,204
$429,408
11
$756,204
$425,100
12
$803,850
$477,837
13
$915,686
$614,504
14
$964,708
$678,355
15
$964,708
$666,642
Account Value
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
0
9 10 11 12 13 14 15
S&P 500
As with any historical illustration, past performance does not indicate or provide any guarantee or assurance of future results. Economic conditions and financial market performance can and do vary
significantly over time. While the participation and cap rates utilized in this illustration consist of Reliance Standards current rates, they do not represent the rates that were actually in effect during the
period illustrated. Reliance Standard has the right to adjust participation and cap rates on an annual basis; accordingly, there is no guarantee that the rates utilized in the illustration will apply in future
periods. Rates current as of 12/02/16 and are subject to change.
Annuities are products of the insurance industry and are not insured by the Federal Deposit Insurance Corporation (FDIC). or any Governmental Agency.
NO BANK GUARANTEE
NOT A DEPOSIT l
* S&P 500 is a trademark of The McGraw-Hill Companies Inc. and must be licensed for use, S&P index-linked products are not sponsored, endorsed, sold or promoted by
Standard & Poors and Standard & Poors makes no representation regarding the advisability or purchasing these products.
Plano, TX 75075
469.543.2155
pilotswmg.com