Don’t Forget To Insure Your Investment

By Phil Wasserman

Have you ever hated paying your car insurance

bill? Did you wind up in a crash that would have

cost you several thousand dollars and you only

had to pay less than a thousand to get out of the

whole mess? If so, then you may realize the

benefits of having insurance.

Unfortunately, when people invest in the stock

market, they never even stop to think about

options that could prevent serious losses. No matter whether you invest directly companies,

managed mutual funds, or indexed stocks, failure to use options can easily turn an otherwise

successful portfolio into a dismal failure.

What Are The Ways to Insure Your Investments?

Even though options may cost a bit more when making an investment, they are far more valuable

than you might realize.

Here are a few options that you should consider when buying stocks:

* Put Options - Used for investing directly in a company. Basically, if the stock value falls

below the “put” amount, someone must buy the stock at the higher price. For example, if you

bought a stock for $50.00 with a $70.00 put option, someone is obligated to buy the stock at

$70.00--- even though the value may have gone below $70.00.

* Stop Loss - Your stock will automatically be sold if it drops below a certain value. If you buy

a stock for $100.00 and put a stop loss at $80.00, the stock will be sold automatically if it drops

to $80.00. Unfortunately, you may not always be guaranteed $80.00; but you will still avoid

heavier losses than simply selling off manually.

* Exchange Traded Funds - These funds give you the latitude to trade during the day on index

stocks instead of being forced to wait until the end of the day. Needless to say, if you see an

index fund tanking because of a terror event or something else, this tool can help you get out of

the market as quickly as possible.

* Variable Annuities - These are special investment tools that allow your stocks to be passed on

to heirs. They typically are not taxed and offer higher ROI than managed mutual funds. While

they may not always make as much as conventional stock investments, they can still offer very

high ROI if managed correctly.

* Growth CD - These interest earned by these CDs is determined by large scale indexes instead

of those offered by the local bank. As with conventional CDs, they are fully FDIC ensured and

tend to be fairly stable investment instruments.

* Index Annuity - Allows you to take part in the stock market without concern for losing your

initial investment. Different annuities may require longer or shorter periods of time before you

can take your money out.

When choosing this type of investment insurance, you should always know how interest is

calculated as well as all the fees involved.

As you can see, there are several ways to protect your stock investments. While they will not

always guarantee protection of all your gains, at least you can protect some of your money.

In order to determine what limits you should set when using these tools, always be mindful of the

fees involved and their impact on your taxes.

Phil Wasserman

Read More of My Blog Posts at

PhilWasserman.com