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[LostDollar]

A monthly strategy is still placing the risk of return on two points of market performance. Its the monthly gains between point A & point B. Interest is credited and locked-in after 12 months. Your return is just as dependent on 2 points in the market as the ones labelled "Annual Point to Point".

Disagree. a monthly strategy (with the lock in at 12 months) is based on 13 data points, not 2.

A monthly averaging strategy measures index change
by comparing the average of the monthly closing
S&P 500® values during the term to the closing S&P
5001 value on the first day of that term. Averaging the
monthly values over the term protects you against
severe declines in the S&P 500. Alternatively, averaging
may reduce the amount of interest you would earn
when the index is rising.

https://www.gaficonnect.com/docs/de...ng-materials/b6024413nw.pdf?sfvrsn=97c744de_4

 

[LostDollar]

With so many of the RILA annuities having a 3,5,7 year year period with only 1 check point at the beginning & end, I wonder how some of those will perform with so many bought the last 12-18 months at near top of the market. Could get interesting with some of the predictions about the markets looking similar to the flat times of 1964-1982

If you talk only 1 check point at the beginning and the end of an annual interest crediting period, that is why the annual strategies concern me with an FIA at this time

And my comment further above which you remarked on, it's not that I can't find an FIA with a monthly strategy, it was that the F&G product I particularly liked does not offer one. I was considering compromising my $5K purchase limit for the F&G product, but that's a no when there is no monthly interest crediting strategy. This is my last 5-7 years, no redo, and I'm not putting that on an annual strategy at this time.

 

[Tahoe Ray]

Disagree. a monthly strategy (with the lock in at 12 months) is based on 13 data points, not 2.

His point still stands. The majority of monthly crediting strategies underperform annual p2p, based on historical (and actual) policy data.

Largely, because one bad month can erase all of those "capped" monthly returns that you had in the previous months. The market it volatile...so if you get capped in 3 good months you miss a lot of the return. In the 4th month, it sells off (which is typical), you can give back most of those gains and have to essentially start over.

Unless the market goes up every month, and never a lot in one particular month, mp2p is just not as strong as ap2p.

That's what scagnt83 means when he said you're still at the mercy of two market points. It ends up the same either way, except the annual p2p have caps structured to capture more gain whereas the monthly do not.

A lot of carriers used to have monthly (to my recollection) but once the agents figured out they weren't as good, they dropped them. They are also a lot more challenging to explain to the consumer.

If you want something very safe/foolproof, just buy a MYGA. American National has a 3.95% 5 year rate, is A rated, and has been in business over 100 years.

 

[Allen Trent]

buy a MYGA. American National has a 3.95% 5 year rate, is A rate

Just saw a list of 10 MYGA carriers between 4 & 4.3%. was a bit surprised. One even had no MVA & 10% free wd immediately

 

[scagnt83]

Disagree. a monthly strategy (with the lock in at 12 months) is based on 13 data points, not 2.

So is an Annual Point to Point technically. Its the sum of the 13 points, with an Annual Cap applied.

Monthly Sum adds the 13 points, after imposing the Monthly Cap.

Both add up the sum of the monthly returns.

Monthly Average does the same, except it takes the sum and divides by 12.

 

[scagnt83]

I will say that despite historical results of Monthly Average, its designed to work best in a sideways market. Which many are predicting over the next decade. So perhaps its the best option moving forward.

If you run hypothetical returns, Monthly Average performs best in a sideways market. Monthly P2P in a strong Bull Market. Annual P2P in a normal bull market. Assuming the S&P is the benchmark being used.

I like Performance Triggered for a sideways market, but only a small handful offer it.

 

[LostDollar]

So is an Annual Point to Point technically. Its the sum of the 13 points, with an Annual Cap applied.

Please show me an industry accepted explanation or carrier interest crediting strategy explanation that says this.

The materials I read say annual point to point interest crediting is based on the change in and index between two points in time. There are some very complex and arcane crediting methods-I can't understand them and am not going to waste my time trying to do so, nor will i buy a product using them. The simple approach I see in the things I look at is that the interest to be credited computation is based on the change between two data points-not 13-or not 366 or 367.

The materials I see for the monthly crediting methods talk computations based on data from 13 data points. It is obvious that a change for one particular month might cause a crediting method to allow no positive return for the year. However, that does not mean that the computation at the end of the year does not use the data based on all 13 points (12 monthly periods). It is also possible the monthly method will allow some positive return for the year. Again, the data from all 13 points (12 months) is used for the final result.

 

[LostDollar]

Largely, because one bad month can erase all of those "capped" monthly returns that you had in the previous months. The market it volatile...so if you get capped in 3 good months you miss a lot of the return. In the 4th month, it sells off (which is typical), you can give back most of those gains and have to essentially start over.

Unless the market goes up every month, and never a lot in one particular month, mp2p is just not as strong as ap2p.

You can make the same general kinds of statements about the annual methodologies.

A bad month in December could cause the annual methodology to have a zero return.
Edit
(A bad month in the last month of your 12 month contract period.)
End edit.

If the market is fluctuating, then you have a chance and timing game with a monthly strategy. It will depend on how the date spans of your contract data points match up to the upchange and downchange date spans for your index. I know almost nothing about stocks and investing, but I am not willing to bet my money on a significant upward change in an index between two mid-year data points for 2022-2023 and 2023-2024. I am talking about an amount of money that is so small a lot of you guys would probably blow that amount on a week's vacation. It is important to me and when I put it in an FIA, I am going to use a monthly crediting strategy.

 

[scagnt83]

Please show me an industry accepted explanation or carrier interest crediting strategy explanation that says this.

The materials I read say annual point to point interest crediting is based on the change in and index between two points in time.

Its just simple math. Its not in carrier sales material because its an over explanation.

The gain between 2 points, that are 12 months apart, mathematically is the sum of those 12 months.

An annual gain, by definition, is the sum of the 12 months.

If you get 2% per month for a year, you have a 12% gain.

So the yearly gain is 12%, but 12 months of 2% gains is what created that 12% gain.

So a 1y Point to Point gain is just the sum of those 12 months.

Im not arguing against your market timing comments. If you are worried about a single month causing bad returns then Monthly Average would be the best option to choose.

Just pointing out the technical aspect that a an annual gain is just a 12 month gain... meaning the gain of those 12 months is added up. That is just math.

 

[LostDollar]

Its just simple math. Its not in carrier sales material because its an over explanation.

The gain between 2 points, that are 12 months apart, mathematically is the sum of those 12 months.

An annual gain, by definition, is the sum of the 12 months.

If you get 2% per month for a year, you have a 12% gain.

So the yearly gain is 12%, but 12 months of 2% gains is what created that 12% gain.

So a 1y Point to Point gain is just the sum of those 12 months.

Im not arguing against your market timing comments. If you are worried about a single month causing bad returns then Monthly Average would be the best option to choose.

Just pointing out the technical aspect that a an annual gain is just a 12 month gain... meaning the gain of those 12 months is added up. That is just math.

I'm not sure about that, but I am not a math heavyweight.

We may be talking past each other.