There are a number of retirement training programs available for those interested in financial planning as well as for those already in the field. In these programs, retirement study is usually a focus. A comprehensive retirement training program should cover case studies as well as the basics of retirement planning. One example of a case study could be a retirement study of a certain type of certificate of deposit (CD). One such CD could be a market-linked certificate of deposit (MLCD). The case study would cover the basic elements of what a market-linked CD is, as well as how to apply it to retirement planning. In this case, MLCD's have many negative features, but one huge positive: no chance of a loss if held to maturity. This retirement study would likely give a retirement trainee the information needed to either recommend or advise against an MLCD. An MLCD will generally have the following features: a term (for example: four years), a minimum cumulative return (a percentage), cap rates on gains or losses, and insurance. Some may have additional features. The advantage of having a minimum cumulative return is that the client is guaranteed to earn at least a certain percentage each year. However, there are also a number of downsides: 1) MLCD's are not liquid (meaning it is difficult to buy or sell them during the initial term); 2) quarterly losses will stay on the books until they are offset by future quarterly gains; 3) unlike many indices, the returns on an MLCD do not include dividends; and 4) tax liabilities. But there are more: 5) averaging (this could be quarterly, yearly, monthly) usually works against the investor; 6) the index that it is tied to often will not see tremendous growth during the term of the MLCD; 7) if the investor does eventually receive gains, they are taxed as ordinary income. After listing out the negatives, it seems like MLCD's may be a bad choice. One must remember, however, that there is actually no chance of a loss if the investor retains the MLCD until its maturity. To compare and contrast performance we must put it side by side to a traditional CD or another type of asset with the same term (perhaps a type of annuity or bond). In one study that compares a market-liked certificate of deposit to an equity-indexed annuity (meaning that it's an annuity that earns interest based on its link to a stock or index), the equity-indexed annuity comes out on top. However, there are some cases in which the market-linked certificate of deposit prevails. A well structured retirement training course will help a financial advisor (or potential financial advisor) gain the skills needed to determine which option is best for the client. In retirement planning it is critical to have a solid knowledge base and to know enough about a variety of financial products so that you can properly advise your clients. Certificates in retirement planning may be a good option for those without a background in the field, or for those wishing to expand their understanding of this financial arena. Copyright (c) 2010 Cory Bowman
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