I couldn't but help feeling a little blue over Tiger Woods feeble attempt to rally back in the final round of the Master's Golf Tournament last month. I thought of the term "mulligan"; coined after a fellow so named who took to re-playing his errant shots on the course with the hope of a better score. Without Tiger's 3 bogies on Sunday, he may have caught the leader and sent the match into sudden death. As to investing, wouldn't it be great to re-do our investments after a bad year, wiping the slate clear to a more promising outcome in year 2?

As retirement becomes a larger and more important goal of so many of us, I have a solution to accomplish such. It's called the "annual reset", and is a feature made available inside a fixed index annuity (FIA). With a little explanation, I'm sure you will agree that it is a valuable benefit to grow your savings, while avoiding any loss of your principal along the way.

The annual reset feature allows you to earn index credits, similar to interest, on a one year time frame. Each one-year time frame is "reset" using the last value of the index. Prior gains in your annuity are locked in. Let's work through an example and follow how the numbers hit the page.

Date DJIA start DJIA finish % change Credit Ending value

2008-09 12,000 13,000 +8% +8% $108,000

2009-10 13,000 11,000 -15% +0% $108,000

2010-11 11,000 13,000 +18 +8% $116,640

Explanation: The stock market, Dow Jones Index (DJIA) starts at 12,000 and moves to 13,000 in three years. Without the reset feature, you would gain credits of about 8%, or $8,000 after year one. In year two the market loses 15%, as the market retreated from 13,000 to 11,000. Your credit was zero, since you are guaranteed no losses in a FIA. Since year two's close is 11,000, and you started the program at 12,000, under normal conditions, you would still be losing money at the start of year #3. But with the "no losses in down years" feature, you are up 8% after two years. Because of annual reset, you start year #3 at 11,000. The market does well, rising 2,000 points to 13,000. Your credits are $8,000 since the cap is 8% in any one year period. Remember, the crediting cap is needed to protect your account in the down years. If we took this illustration out for another two years, where the market gained 5% in years 4 and 5, your account would grow to $128,600 using the reset feature. Without it, you would have $119,400. That's quite a difference, $9,200 more money by my count.

In summary, the combination of annual reset and a guarantee of no losses in down years, make this benefit within a fixed index annuity valuable for investors worried about market risks, while trying to keep their investments growing before retirement. Now maybe I can convince the P.G.A. to apply this concept to tournament play - that would indeed be interesting to watch.