As you know investors can get nervous when they see their portfolio value dropping and volatility is in the headlines. They might feel better knowing they have a buffer to lessen the impact of market loses. And by losing less they can recover faster.
Here’s a closer look at the gains your client would need to recover from a large loss.
The chart below shows how a buffer can help limit the amount of an investment loss in negative performing markets. The more clients lose, the greater their gain has to be to get back to where they started. Protecting them from the first 10% of losses can have a big impact on account values over time.
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Before investing, carefully consider the investment option objectives, risks, charges, and expenses. Contact a financial professional or visit principal.com for a prospectus or, if available, a summary prospectus containing this and other information. Please read carefully before investing.
Buffer series not available in New York and may not be available with all broker dealers.
Asset allocation and diversification do not ensure a profit or protect against a loss.
The buffer funds have characteristics unlike many other traditional investment products and may not be suitable for all investors. These strategies could limit the upside participation of the buffer fund in rising equity markets relative to other funds. The buffer provides limited protection in the event of a market downturn; the buffer fund does not provide principal protection, and an investment may experience significant losses on its investment, including the loss of its entire investment. The buffer Fund may invest in FLEX Options, which are associated with additional risks. Due to the cost of the options used by the Fund, the correlation of the Fund’s performance to that of the Index is expected to be less than if the Fund invested directly in the Index without using options and could be substantially less.
The potential return an investor can receive is subject to the upside cap and the partial participation beyond the cap. If the index grows beyond the cap, the investor will not experience the full gains. The investor will receive a percentage of any gains beyond the cap. This amount, net of fees and expenses, is the maximum return an investor can achieve over its outcome period.
Buffer and participation rates apply if investment is held from the beginning of the outcome period until the end of the outcome period. Investments can happen at any time during the outcome period; but results will vary. The buffer and participation rate will reset annually. Index returns do not reflect any fees, expenses, or sales charges.
There is no guarantee the investment options will be successful in achieving these outcomes for any outcome period. Returns may only be realized if investors hold the investment options from the beginning to the last day of the outcome period. Those who invest after the outcome period has begun, or sell prior to the end of the outcome period, will experience different returns than if the investment had been held for the full one-year segment. For current rates please visit principal.com/buffer.
Variable annuities are long-term investment products designed for retirement purposes and are subject to market fluctuation, investment risk, and possible loss of principal. Variable annuities contain both investment and insurance components and have fees and charges, including mortality and expense, administration, investment option fees. An annuity's value fluctuates with the market value of the underlying investment options, and all assets accumulate tax-deferred. Withdrawals of earnings are taxable as ordinary income and, if taken prior to age 59½, may be subject to an additional 10% federal tax. Withdrawals will reduce the death benefit and cash surrender value.
S&P 500 is a trademark of S&P Global and is used under license. The product is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the product.
Annuity products and services are offered through Principal Life Insurance Company. Principal Variable Contracts Funds are distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC, and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, Iowa 50392, principal.com.
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