Products which offer market returns and no risk of loss? Yup, investment firms are touting them. But buyer beware! 

One investment, a fixed indexed annuity, purports to provide just that. A cross between an insurance contract and an index fund, fixed annuities usually offer a guaranteed annual return along with an assurance of no losses in years when the stock market drops.

But as Wall Street Journal columnist, Jason Zweig, recently pointed out, "Unfortunately, these annuities are often marketed so aggressively that you could be fooled into thinking you can get stock-like returns at no risk. You can't."

Opportunity Cost

Owning an annuity does put a floor under your potential losses, but it also puts a ceiling on your potential gains. This is one reason why, for an investor with a long time horizon (10+ years), they make such poor investments. Over time, the stock market goes up more - and more often - than it goes down.  Capping the upside of an investment can severely limit long term returns.

Additionally, when you buy a fixed indexed annuity you have to lock up your capital for seven to ten years, and c an pay hefty fees along the way. Finally, there are often stiff penalties for early withdrawal.

Buyer Beware

Brokers will often try to sell annuities to nervous investors. In making their case, they might employ deceptive techniques like using hypothetical average returns or comparing their product to the S&P 500 without dividends (even though dividends have averaged 2% annually for decades). Rather than thinking of annuities as a substitute for stocks, they should be thought of the same way you think of other fixed dollar investments, like CD's and Treasury bills; but  with more fees, less transparency and significantly less liquidity.