The Stock Market, The Magnificient Twenty and Volatility

It’s important to know that even in the best years the stock market carries a 30% chance of loss.  So there is always a 1 out of 3 chance the market won’t perform to expectations.  Sadly, in good times people think the market will continue to climb.  But what are the odds of consistently beating the market and avoiding market meltdowns?  What are the odds of becoming a professional athlete?  Plenty of people have overcome the odds and made it big in sports.  But what do you say to a 50 year old who wants to play in the NFL?  We need to be realistic.  The older you get, you may not be able to afford the time to regain your losses.

Have you heard of The Magnificent Twenty? They’re a group of 20 in an elite group who lost at least $100 million in the stock market back in 2008.  Now here’s a question for you – does anyone have better information than these informed investors?  No one complains when the market is roaring, but how vulnerable are normal investors if the top guns don’t see the avalanche coming?

The theme of the fixed/indexed annuity message is safety and security.  There is plenty of research and studies to back up the fact that these plans work and they work well.  When you are retired, everything works completely different than when you were working.  It’s like doing everything in a mirror.  Money management activities become opposite to when a person is working.  Safe money fixed/indexed annuity accounts grow on a guaranteed basis, with no risk, even in uncertain economies that occur from time to time.  It is pretty satisfying to save your retirement money from collapsing and not be in a position where you never have to ask the question “Can I win or lose?”  Can you put a price tag on peace of mind?

The safe money fixed/indexed annuities method speaks for itself:  The ability to grow money safely, securely, and guarantee a lifetime income.  The ability to avoid financial enemies: risk, taxes, and fees.  Unfortunately, the average person spends more time planning a vacation than managing their money.

The safe money fixed/indexed annuity owner won’t suffer losses when the market fails, because you never leave the safety and security of a highly rated insurance company.  Do you want your hard earned money to have privacy, be protected from probate, and pass automatically to your heirs?  Is it desirable to have the potential to increase retirement fund yields without market risk and no brokerage fees?

Do you wish to have an additional stream of income riding piggy-back to your pension and social security?  If you have a safe money fixed/indexed annuity, you have all of the above.

Concerned About Trusting An Insurance Company With Your Important Retirement Funds?

How safe is your fixed indexed annuity?  Should you trust a fixed indexed annuity with your important retirement funds?  What happens if an insurance company were to fail? These and other questions are vitally important and the answers may surprise you.

Why even ask these questions?  In the past, investors simply trusted the third party. Now, after the financial meltdown beginning in 2008, questions must be asked.

And answered.

The simple fact remains that retirees and retiring Baby Boomers today are looking for a way to guarantee that their money is safe, and that they will have enough income to last as long as they live.

Income is the more important decision, far more important than having enough money.

“Income is King with the Baby Boomers.”   

So is the money safe in an annuity?  Baby Boomers are very concerned about safety for one simple reason.

“They Don’t Have Time to Make It Again!”

Other than social security and earned pensions, most retirement investments are not guaranteed and are subject to variations of account values – volatility.   How can they be assured their retirement accounts will last as long as they are needed?

Their worries are justified and the number one concern for retiring Baby Boomers is simple: safety –  Is my money safe?  So, how does this safety work?  How are annuities actually guaranteed?  The safety of annuities is like a safety net, a safety net to cover any possible occurrence.

Insurance Company Assets: The safety of an Index Annuity is based on the financial strength and claims paying ability of the company which issues the annuity. Annuities are regulated by each individual state Department of Insurance (DOI).  The DOI regulates, audits, and sets reserves of the insurance companies. This assures the annuity purchaser of the solvency of the insurance company.
These highly regulated companies are also subject to strict capital reserve requirements which result in reserve level requirements.  These capital requirements can be higher than the capital reserve requirements for banks regulated by the FDIC.

Because of the high regulations required by each state’s Department of Insurance, the insurance companies must invest in solid, safe, and suitable vehicles.  They invest in some of the most highly-rated and conservative investments available, such as highly rated corporate bonds. In addition, a high percentage of their investments are in U.S. government bonds and U.S. Treasuries.

Annuities are some of the most regulated financial products available today.$

Avoid Unnecessary Probate Expenses and Time Delays With This Simple Planning Tip

Your IRA, 401 (k), pension plan and other qualified plans can transfer at death without the need for probate by designating a named beneficiary.

When you open a retirement savings account (such as an IRA), you have the option of naming a beneficiary. This beneficiary designee stipulates where these assets will go when you pass away. A beneficiary form commonly takes precedence over a will, because retirement accounts do not fall under probate.

 

If it has been a while since you named the beneficiary on your accounts, it makes good sense to review them.  If you be a mistake for your IRA and other pension assets being inherited by someone you no longer trust or love.

 

One situation to avoid is leaving the designation blank on the beneficiary form because then the IRA assets may be distributed according to the default provision set by the IRA custodian (the brokerage firm or insurance company custodial hosting the IRA account).

 

Keep your planning simple, name a beneficiary. If in the future you want to name someone else, easy, you are in control.

 

This might also be a good time to review all your beneficiary designations on your life insurance policies, annuity contracts and bank accounts.  Bank accounts allow for TOD (transfer on death) forms which can also help you avoid probate.

 

Simple planning with a named beneficiary can save money, time and possibly undo tax liability.$

Mother, Banks and Options to Avoid Poverty

I found a very interesting letter to the editor in the financial section of my local paper.  It started like this:

“My mother is sixty-seven-years old and has saved up a half-million dollars in a bank account earning about 1% interest. Obviously, not a very good interest rate. She wasn’t sure what to do to earn more money on her money. Her house was paid off as well as her car. She had been thrifty her entire life, but still felt like she was making a mistake keeping her money in a normal bank account. I want to find a way to help her.”

I was quite taken by how accurate and common this is. Just think how many people are in this exact situation.  Here’s a guy wanting to help his mother and yet her options are so limited. The government’s intentional intervention into the stock and bond market through QE3 has lots of side effects. His mother is an example.

She worked hard and she saved, now she is near the poverty line because of things she has no control over, bank interest rate yields.  Many people think the bank sets the interest rates, but they don’t.  Interest rates in banks are set by one superior force, the same force that is funding QE3, The Federal Reserve.  Banks charge what they are told to charge and as long as the Fed says interest rates are low, they are low.

So what are this mother’s options in this situation?  She can’t afford risk and doesn’t have time to earn the funds again if she were exposed to risk.  She has to stay in safety and that in of itself can be a death sentence. I would suggest she look at an annuity or a market-linked bank cd.
Good luck, Mom.$

Is The Stock Market Really a Free Market?

The stock market is based on free enterprise, right?  It is a place where one party can sell and one party can buy based on free will and personal knowledge. It is the exchange of value for money and a place to raise and disburse money.  It is the core of our economy; it is how our free market works as a free market.

I am sorry to inform you, it is not anything like that, and it is a manipulated market and a market that is opposite of how a free market operates.  Who manipulates it? Actually there are two sources: Wall Street itself and the biggest manipulator of all, The Federal Reserve.

Beginning with the Bush Administration and carried on with the Obama administration, the Federal Reserve is bulling the stock market.  Each month they buy $85 billion of US Treasuries which keeps the interest rates at an all-time low.  Because of the very low yield on interest bearing options, money has flooded back into the stock market.  Once the Federal Reserve slows or stops their Treasury buying spree, money will flow from the stock market and back into interest bearing vehicles.  Money flows based the risk/yield principle and if investors can receive a reasonable yield without accepting risk, the funds will flow.

The stock market is rising to record highs after Federal Reserve Chairman Ben Bernanke said the central bank would continue to support the U.S. economy. Investors also bought bonds after being reassured that the Fed was not in a hurry to pull back on its huge bond-buying program.

The program the Federal reserve is using is called Quantitative easing, there have been 3 levels, QE1, QE2 and the current QE3.  Many high ranking people feel the QE3 should stop such as Bill Isaac, former chairman of the FDIC, says it’s high time for the Fed to start tapering its quantitative easing: “I’ve never liked QE. It’s been very harmful to the economy and normalizing things.”

What should you do as an investor or a depositor?  How about moving to a no risk approach and living with the yields.  Banks, US Treasuries and insurance company annuities all offer risk free vehicles.  Maybe you should invest in all three and average your overall yield, that would be diversification.$

The Chicken, The Egg and Goldilocks

Over the past few years, we’ve seen the” chicken and egg” cycle continue in the national economy.  The Federal Reserve pumps more money into the system and buys vast quantities of U.S. bonds and mortgage backed securities.  This is one reason the stock market took off as the Fed’s monetary policy pushed buyers into riskier assets like stocks and bonds. So why are you wary of the stock market wave?

Because deep down you know the Fed’s money infusion causes economic distractions.  What happens when stock market returns are eroded because of inflation (higher prices)?  If people open their wallets and pocketbooks, prices will rise because of higher consumer demand for everything from peanuts to petrol.  But real growth stops when prices go up at the same time stocks go up.  Higher prices eat into your profit.  Suddenly, the wallets and pocketbooks close up and consumers hunker down.  A negative spending consciousness means a negative economy.  At this point, borrowing costs skyrocket, real estate struggles, and finance as a fuel for capitalism is tapped out.

So where does one go for safety and security? 

Safe money fixed/indexed annuities can be the logical choice.  Wall Street will come running to the safe annuity industry if they see any chance of recapturing the funds that have evaporated from them.  As a matter of fact, new products will be developed which will only have allusion of what we know as an annuity.

There is no public outcry of dissatisfaction with fixed/indexed annuities.  In 2012 there were a total of 50 complaints initiated against safe money fixed/indexed annuities.  There were approximately 30 billion dollars submitted in new sales for fixed/indexed annuities.  Think about it – there are 52 individual states in the United States, and a total of 50 complaints.  This breaks down to only 1 complaint per state?  $30 billion dollars in new business divided by 50 complaints?  Your calculator can’t even do the math.  Folks, there is no other industry that boasts the same degree of customer satisfaction as safe money fixed/indexed annuities.  It is a squeaky clean industry.  All these facts run contrary to any misinformation campaigns via Google search engines.

Have a look at Fixed Indexed Annuities, just might be a good option for your important money.$

The US Treasury, Your 401(k) and Longevity Income

The Treasury Department announced in February a plan to help 401 (k) and IRA owners to add annuities to their investment options.  The fact that “longevity” options can increase income for a lifetime makes great sense.  Knowing an income can pay for anytime period allows for a lifetime of security for the plan participants. The announcement by the Treasury received a lot of attention and helped push annuities to the forefront of available options.

The proposal would give these annuities “special relief” from Internal Revenue Service rules that require  retirement plans to start taking taxable withdrawals at age 70½. Treasury officials have not yet provided final rules and regulations, but the obvious need for annuities in planned as an alternative to guaranteed income needs.

A recent discussion with Treasury officials did reveal an outline of their plans, income withdrawals would need to start by age 85 and there would be a limit percentage of the 401(k) that can be placed in the annuity.

Many details still need to be considered such as how the annuity would be managed within the 401(k) plan administrator. How best to select the correct insurance company and keeping compliant with existing Employee Retirement Income Security Act  (ERISA) rules are key concerns..

The Treasury has reiterated the need for “longevity income” for plan participants and outsourcing the responsibility to insurance companies seems like a good fit. Many companies build their portfolio around the need of their customers income needs lasting a long period of time. Insurance companies can reduce the risk of an individual making eh incorrect decision with their important assets.

Outsourcing the responsibility for providing income for plan participants is solid thinking a recent official stated.  Place the responsibility in the hands of those who are expert in the field.$