Protecting Your S&P 500 Funds Against A Crash? Guaranteed Principal Protection With CPSM vs A FIA?

How much might you lose if the market crashed and what can you do if you think we're in an AI bubble? Let's talk about two safe ways to stay invested in the S&P 500 with guaranteed principal protection. Hello Diamond Nest Egg members, Super Savers, and Quartz fans. I hope you're healthy and well. With the stock market starting to look a bit frothy and bubbly again, some of you in our appear to be getting increasingly worried that everything might come crashing down and wipe out a part of your nest egg. At the time of this taping on May 22, 2026, the S&P 500 was hovering around $7,473, only slightly down from its recent all-time high of $7,501. But a market downturn is not the only thing that has some of our Diamond Nest Egg regulars concerned. Oil prices are still very close to $100 in the midst of ongoing geopolitical conflict, and consumer price inflation ratcheted up again to 3.8% year over year, while producer price inflation ran up even higher to 6% year over year. Against this rather unwelcome backdrop of a potential stock market bubble, higher inflation, and overall market volatility and uncertainty, it's no wonder that some of you are looking for opportunities that can guarantee your principal while still giving you up to 9% upside on the S&P 500 at the current time. So, with that in mind, here are the three topics I'll be covering today. 1. Which investments can guarantee your principal while still leaving you some potential market upside, and how might they protect you against inflation? 2. How are fixed indexed annuities, FIAs, and structured protection ETFs different, and where can you get them? And 3. How might you decide between a FIA and a structured protection ETF, and what's our personal perspective? Let's dive in now, folks. Which investments can guarantee your principal while still leaving you some potential market upside, and how might they protect you against inflation? So, protecting your savings while still growing your nest egg is not so easy when you fear either a potential AI-driven market crash or inflation potentially ticking higher, or maybe even both. As we often say here at Diamond Nest Egg, everyone's financial journey is different, so many of you will not be surprised when I tell you there's no single right answer in this instance. The choice you make depends on your personal situation and risk appetite. In principle, though, you have three options if you're worried about a stock market bubble and potentially rising inflation, all with their potential advantages and disadvantages. If your time horizon is short or not long enough to wait for an ultimate recovery, and or you're ultra-conservative, you may want to sell your S&P 500 now and reinvest your savings into treasuries, annuities, money market funds, or other low-risk investments to ride out the storm. This strategy will protect you against a market downturn. However, unless you buy inflation-protected bonds, it will also expose you to inflation risk, the risk that higher prices may eat into the purchasing power of your savings, as well as the risk that your bonds may lose value on the secondary market if and or when the Fed starts raising rates to fight inflation. Remember, it's always rates up, prices down in bond land if you're not holding your bonds to maturity. At the other end of the spectrum, if you have a longer time horizon and are willing to take the risk for an expected further upside, you might consider staying invested in the S&P 500. You may have to stomach some short-term volatility, but you will be sure that you won't miss out on any further gains in the market. Plus, because equities are real assets, this strategy should largely protect your savings against inflation in the long run. And if you're somewhere in the middle, you might be tempted to choose some of the investment products on the market that allow you to stay invested in the S&P 500, but with a full or nearly full downside protection that guarantees your principal. And because, unlike with bonds, you keep a part of the equity market upside, you may get some level of inflation protection as well from this strategy, so long as the stock market with its real assets keeps going up with inflation, which should be the case outside of any severe stagflation scenarios. Let's dive deeper into this middle box for today's video, because in a way, these investment products sound like the best of both worlds. You're hedged against the risk of losing your principal that you've worked so hard for, while still keeping some of the equity market upside, which may also help protect you against inflation to a certain degree, as we just discussed. Of course, in real life, this risk reduction will come at a price. There are no free lunches in finance. And the price you pay is that you essentially trade a part of your possible future gains on the S&P 500 for the downside protection, that you don't get regular income from dividends, and that depending on the type of product you choose, you may also have to make compromises on the liquidity of your principal. We'll dive deeper into these trade-offs shortly. There are two fundamental product types in this space. Fixed Indexed Annuities, or FIAs. These are insurance products that can be customized to your individual situation. And Structured Protection ETFs, which are also known as Buffered ETFs. These are traded like normal shares on exchanges. Here's what Fixed Indexed Annuities, FIAs, and Structured Protection ETFs have in common, in principle. One, both FIAs and Structured Protection ETFs can protect your principal against market downturns. So, let's say you invest $100 in the S&P 500 via a FIA. Then you will get $100 back when the FIA matures. And it doesn't matter if the S&P 500 has fallen by 2%, by 50%, or even more in the meantime. Bringing us to commonality number two. Your principal protection may only work perfectly when your FIA or Structured Protection ETF matures. So for example, you know that you will always get your $100 back when your FIA matures, but not necessarily before or after. Think about it like the guaranteed principal repayment of a bond, which also only works if you hold to maturity. For principal protected products, the industry refers to this as point-to-point. And it's fundamentally a consequence of how these products ensure the downside risk. The details can get fairly complicated, but do leave a comment below for me and Marcus, if you'd like a deeper dive into how this works, because it is important to understand given the growth of principal protected products in recent years. Commonality number three. Both FIAs and Structured Protection ETFs let you keep a part of the upside of the underlying market index, but you always have to trade away the other part of any potential future gains. That's the price you pay for the downside protection. For instance, let's assume that the FIA or Structured Protection ETF you bought came with a one-year cap of 9%. Then an initial investment of $100 can only ever grow by 9% to $109 in that year, even if the S&P500 went up 25% or even 50%. Still, even this partial upside from an underlying equity index may give you a certain degree of protection against inflation, as I mentioned earlier, so long as equity markets as real assets keep going up with inflation. Commonality number four. In their most basic form, both FIAs and Structured Protection ETFs do not pay regular income or dividends, with some exceptions. In other words, assuming that you invest $100 into a Fixed Index Annuity or Structured Protection ETF, you will generally have zero dollars in regular income during your holding period. As for the exceptions, one example might be if you add an income rider to a FIA. We'll get back to this later. And five. With a principal guaranteed investment like a FIA or Structured Protection ETF, you don't own any shares of the S&P500 directly. Both FIAs and Structured Protection ETFs use options and other derivatives, and you are relying on all involved parties along the chain to keep their promises. For FIAs, the credit rating of the insurance company you buy your FIA from is the most important factor here. For Structured Protection ETFs, it's fundamentally more complex, but you may want to keep an eye on the track record and reputation of the manager of the ETF. So, now that you know that both FIAs, Fixed Index Annuities, and Structured Protection or Buffered ETFs can guarantee your principal while still leaving you some potential market upside that might give you a certain protection against inflation, let's move on to the next part of today's discussion. How are Fixed Indexed Annuities, FIAs, and Structured Protection ETFs different? And where can you get them? Let's make things a bit more concrete here and use two illustrative examples with numbers to see how FIAs and Structured Protection ETFs differ. For the FIA example, we will use an annuity from a leading insurance company that is A++ rated, the highest possible rating from AMBEST, a ratings agency that specializes in the insurance industry. And for the Structured Protection ETF, we will use the Calamos S&P 500 Structured Alternatives Protection ETF for May, ticker CPSM. CPSM was launched in 2024 and has total assets of $55 million at the time of this taping. As a way of background, Calamos is a leading independent asset manager that was founded back in 1977 by John Calamos and has grown since to $50 billion in assets under management and 385 employees. Here's how Fixed Indexed Annuities, FIAs, and Structured Protection ETFs differ. Difference number one is what many investors may notice first when they start comparing investments with a principal guarantee. Upside caps are often better for FIAs than for Structured Protection ETFs. Here's what the upside caps might potentially look like for CPSM versus a FIA. Again, CPSM is Calamos' S&P 500 Structured Alt Protection ETF for May. In this column, you have the product. In this column, you have the time horizon for principal protection and the upside cap on the S&P 500. And here, you have the upside cap on the S&P 500 net of fees. For Calamos' CPSM, the time horizon for the principal protection is one year, and the time horizon for the upside cap on the S&P 500 is also one year. The upside cap on the S&P 500 is 6.05% net of fees, assuming that you had purchased it when the new protection period started on May 1st, 2026. Do note that if you purchase CPSM at any other time, this upside cap net of fees may or may not be 6.05%. If you're interested in diving deeper into CPSM or any of its sibling funds, drop a comment below and let us know, and Marcus and I will see what we can pull together if there's enough interest. For a seven-year fixed indexed from our A++ rated insurance company, the time horizon for principal protection is seven years. And if you opt for a time horizon for the upside cap on the S&P 500 of one year, that upside cap on the S&P 500 net of fees might be as high as 9% in year one. But in this instance, this upside cap resets every year. So in years two through seven, the upside cap may be higher than the 9% in year one, lower than the 9% in year one, or even the same as the 9% in year one, perhaps. You just don't know beforehand. If you do want to know beforehand for certain, you can also choose this seven-year fixed indexed annuity from the same A++ rated insurance company where the time horizon for the principal protection and the time horizon for the upside cap on the S&P 500 are both seven years. In this instance, the upside cap on the S&P 500 net of fees may potentially be 7.25% locked in for the full seven-year term of the FIIA. If you're interested in seeing whether this fixed indexed annuity might be a good fit for your individual situation, or if you want to see what the FIIA rates look like whenever you're watching this video, email us at jenniferatdiamondnetstake.com so that we can connect you with our trusted annuity specialists who can help you find what the best options and rates may be for you personally. Always remember that your rates, conditions, and details are not locked in until you sign your annuity contract. Please also note that all the data in this table and in this video are for illustrative purposes only, and as of the time of this taping on May 22, 2026, unless noted otherwise. As we often say in finance, past performance is not indicative of future results or outcomes. Moving on now to difference number two, which helps explain why FIIAs might often offer higher upside caps on the underlying market index they track. FIIAs are fundamentally illiquid, while protection ETFs are traded on a stock exchange. For example, you can buy or sell CPSM anytime the New York Stock Exchange ARCA is open via your broker, although you will have to accept the then current market price, just as you would for a bond that you want to sell before maturity, but at least you can do it. In contrast, the FIIA in our example is locked in for seven years, and you can generally only buy it from an insurance company. There's no meaningful secondary market as far as we can tell. If you need access to cash before the seven years are over, you have a 10% free withdrawal allowance per year in this instance, but if you need more than that, you may have to pay potentially stiff penalties and or may even not be able to access your capital at all before maturity. Difference number three. Structured protection ETFs have an explicit fee or expense ratio, while the profit margin for the FIIA is already baked into the product itself, so to speak, like when you buy a car. This means that for a FIIA, you don't need to deduct any fees from the numbers. For example, the 100% guarantee on the principal means that you will indeed get back at least $100 at maturity for an initial principal investment of $100. For a structured protection ETF though, you may need to deduct the fee from some gross numbers. For example, if you invested into CPSM at launch on May 1st, you would need to deduct the fee of 69 basis points per year from the gross protection level of 100%, which translates into an effective protection level of 99.31%. In other words, if the S&P 500 goes down between May 1st, 2026 and April 30th, 2027, you may only get back $99.31 on a $100 investment after a year. That said, that may still count as nearly full principal protection for all practical purposes, at least in our mind. Others may not feel the same way though and ultimately decide that the possibility of getting $99.31 on a $100 investment after one year in the worst case scenario is not good enough for them, even if it may allow them to participate to some degree in the upside of the equity markets. As I've said before, these upside cap numbers here are already net of fees. Otherwise, the 6.05% upside cap for CPSM would be higher. As you can see from Calamos's website, before the 69 basis points expense ratio is deducted, the gross upside cap was 6.74% for CPSM if you purchased it on May 1st of this year. Moving on now to difference number four. FIAs, unlike structural protection ETFs, are insurance products, so they can be customized or personalized in many different ways. As we've already shown you, you can lock in the S&P 500 with a cap for one year or for seven years. Or, you could also choose a modification that doesn't have a hard cap but rather splits any upside with you. For example, you keep 75% of any gains in the index while the other 25% remain with the insurance company in year one. And in years two through seven, the percentage splits in any potential upside on the index would be adjusted by the insurance company based on the then current market conditions. And there are other possible underlying strategies as well. For example, your potential upside could be based on a retiree spending index, real estate, or even gold shares. In contrast, ETFs are traded products that are necessarily standardized. For example, CPSM is based on the S&P 500 and has a one-year guarantee that always resets, matures if you want, on May 1st of every year. Meaning, if you want the 100% principal guarantee, you have to buy CPSM on May 1st and hold it for a full year, similar to how you would do it in a buy and hold strategy with a one-year treasury. This strict timing requirement, by the way, is the reason why Calamos has launched a whole series of 12 structure protection ETFs, one for every month, to make it easier for investors to buy the protection at the full starting value. Let's move on to difference number five now. As I touched upon earlier, in their most basic form, both fias and structure protection ETFs do not pay regular income or dividends, with some exceptions. And one such exception would be that with some fias, you might be able to add an income rider. The income rider is essentially an additional agreement that you would have to buy against an extra fee. And what it does is it basically allows you to use the capital in the fia to generate a lifelong guaranteed income stream for you. Drop a comment below for me and Marcus if you're interested in seeing how this might work and what the numbers could look like. A fia with an income rider might help some soon-to- be retirees and already retired folks in our community to add a guaranteed and lifelong monthly paycheck to the base part of their portfolio. But it does require its own separate video. Or email us at jenniferdiamondnestic.com if you're interested in getting connected with our trusted annuity specialists who can walk you through what the best annuity options and rates might be for your specific situation. Annuity rates track interest rates and interest rates remain at two decade long highs on average. So now may be a good time to lock in some of those rates if that's what you're interested in. And because I know some of you will ask, while we would put a fia with an income rider into the base part of a portfolio because it can generate a lifelong guaranteed income stream, a fia without an income rider as well as structural protection ETF like CPSM would go into the boost part because neither products guarantee a lifelong income stream. Bringing us nicely to the next part of today's discussion. How might you decide between a fia and a structured protection ETF? And what's our personal perspective? As you've seen, both fias and structured protection ETFs may be options to consider if you're worried about a potential market bubble and inflationary pressures. The fia protects your principal at 100% and CPSM at 99.31% on an annual basis. And both let you keep a part of the potential future upside of the underlying market index, which may help mitigate some inflation risks as well. Of course, you need to be comfortable with the fundamental construction and risk profile of these products. As we always say, never buy anything that doesn't allow you to sleep well at night for whatever reason, and never buy an investment that you don't understand. That's why we go through such great lengths here at Diamond Estate to break down the complexity for you. That said, even if you understand what fias and structured protection ETFs have to offer and like them at this point, there's still the question of which of the two might be the better solution for you and your individual situation. So here's our personal take on this. Hopefully, it will help give you some perspective as you decide for yourself which might work better in your portfolio. You may want to consider a fia if these points are important to you. One, you want the potentially higher upside cap rates, and don't mind that this comes at the expense of lower liquidity. Two, you want the ability to lock in both the principal protection and the upside cap rates for longer periods, like for seven years in our example today. Fias are also available for shorter time horizons. And depending on the insurance company, you might be able to buy one with an even longer time horizon than seven years. But three years to about seven years are the most common maturities. Three, you want to be able to customize the fia to a large degree to your individual situation. For instance, you want to choose underlying indices other than the S&P 500, and or you want to opt for a participation rate which splits the upside between you and the insurance company, rather than just have a hard cap on the market upside, as in today's examples. Four, you want to add an income rider to convert your fias underlying capital into a lifelong guaranteed income stream. Five, you want an investment that is guaranteed and backed by the state guarantee association in your home state. You can only get this backing with a fia and other insurance products, not with structured protection ETFs. And of course, always remember to stay within your state guarantee association's protection limits. On the other hand, you may want to consider a structured protection ETF like CPSM if these points are more important to you. One, you want the liquidity and the ability to trade your investment on the exchange. Two, you prefer the very low minimum investment of an ETF over a fia. For example, CPSM was trading at $29 per share as of the close of business at the time of this taping on May 22, 2026. Fias, like many annuities, often have higher minimums in the thousands and start offering better rates from $50,000 to $100,000 or more. Three, you like the easiness and standardization of an ETF. With a structured protection ETF like CPSM, you can simply log onto your broker's platform and buy it in your brokerage and or retirement account. This is not something that I would recommend doing with a fia, even if you could. Fias, like many insurance products, and given the dollar amounts involved, are designed to be customized to your individual circumstances, goals, and expectations, whether we're talking about the best rates, an ideal time horizon, or an income rider, or death benefit. Even the state you live in can make a difference. A trusted annuity specialist who understands the ins and outs of your personal situation can help you with the process, but it's certainly not something that most of us should just go online, check a few boxes, and quickly buy without deeper levels of due diligence. Point number four, you want something that automatically rolls over. CPSM as an ETF will live forever, so to speak. Every year it resets, and the next one-year outcome period starts again automatically. If you do nothing and keep your shares, your principal will again be protected at the new protection level, and you will again participate in the potential returns of the new upside cap rate for the next one-year outcome period. Point number five, you like the potential tax advantage that an ETF can offer. Remember the potential share price gains on an ETF become only taxable when realized, and might be classified as long-term capital gains if the conditions are met. In contrast, full ordinary income tax rates may be applicable to gains from a fia when they're paid out. So now that you better understand how both fias and structural protection ETFs like CPSM may protect your principal while giving you a part of the potential future upside of the underlying market index, drop a comment below and let us know what your thoughts are on both. What's your preference, or do you own a fia or some CPSM or something similar already? And as always email us at if you want to get connected with a trusted annuity specialist to see what the best annuity options and rates might be for your personal situation whenever you might be watching this video. All right Diamond Nest Egg members, super savers, and course fans, I hope you enjoyed this video and learned something new, and see you again very soon with more brand new wealth-building content for your financial journey.