78 • MARTIN H. RUBY
Indexing performed much better. By eliminating just a few bad (negative) years (2000 to 2002 and 2008) and making them zero percent credited interest, the index had an average annual credited rate of 4.8 percent. That’s not too shabby in a market that is losing money! Indexing lets you capture a good portion of the upside, with no downside risk. Once that interest is credited to your account, you never give it back, even if the market drops. As a result, it creates a return pattern that is incredibly powerful. This is one powerful way you can eliminate market risk in your retirement savings. With indexing, it doesn’t matter when you want to retire: when the market is strong, your account is grow- ing. When the market is down, your account value stays strong. It doesn’t matter if the market rises and falls because you don’t have to earn back market losses, like in a 401(k) with mutual funds. In- dexing delivers a steady, predictable growth pattern that slashes your market risk.
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