10.7.22: Audio automatically transcribed by Sonix

10.7.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to the Active Wealth Show with your host, Ford Stokes. Ford is a fiduciary and licensed financial advisor who places your needs first. He’ll help you protect and grow your wealth. The Active Wealth Show has grown because activators like you want to activate their retirement planning with sound tax-efficient investing. And now your host, Ford Stokes.

Ford Stokes:
Hey everybody, this is Ford Stokes, the chief financial advisor. And I’m joined by Sam Davis, our executive producer on This Week with the Active Wealth Show right here on AM. 920 Answer We’re so glad you’re with us. And on this week’s show, we’re going to talk about our Financial Wisdom Quote of the week. We’re also going to talk through about how do you get to the guarantees we’re getting so many calls from. So many people are like, hey, Ford, we’ve lost the money in the market this year. And, you know, my advisor is not communicating with me. Can you help me? And the answer is, yes, we can. And the best way for us to help you is just reach out to us at ActiveWealth.com. You can just go to ActiveWealth.com and click that schedule consultation button in the upper right corner and we’re happy to help you do that. The next thing we can do is you can also just pick the phone up and call us at 770 685 1777 again 770 685 1777. But with so much uncertainty in the markets this week, we’re focusing on how to get to the guarantees. We’re we’ve been asked by so many people over the last several weeks for to I just need to figure out how I can invest with some guarantees. I know it’s difficult. I’m willing to pay more for that.

Ford Stokes:
I’m willing to figure out what I’m doing. But I’m so concerned about this market and concerned about who’s leading our country and what’s going on politically and all that kind of stuff. I need to get to some sort of guarantee, at least with 40 or 50% of my assets. How do I do that? And we’re going to talk also our our problem solver this week is going to discuss Linda, who is a divorced single female, who’s 50 years old, who is a marketing executive here in Atlanta. And what she is going to do to set herself up for success. And I think you’re going to like what her strategies are and what how you could potentially replicate some of those strategies for yourself and put them into your customized plan. Also, we’re going to talk about the cost cutter of the week, how you can reduce phone costs and evaluate how you consume media. And then also, we’ll we’ve got a really neat one this week in history that Sam will give us that I thought was really cool and. We just really appreciate all the activators out there again and activator. You’re probably driving around right now, you know, heading Home Depot or or Lowe’s or having a kids athletic event or just going to lunch here on a Saturday and getting ready to to watch the dogs beat the heck out of the Auburn Tigers.

Ford Stokes:
I would assume it’s going to happen this week or you’re getting ready to see that interim coach for the Georgia Tech Yellowjackets possibly win his second game. And that was a great upset, by the way, by the Yellow Jackets against Pittsburgh last week. Congratulations to the yellow jackets there. But as you’re driving around and you’re probably wondering, hey, who is an activator and somebody who wants to build a successful retirement, somebody who listens to this show. So if you’re listening to this show, congratulations, you’re an activator. Number one. Is there folks that that want to build a fee efficient portfolio. Number two is they want to build a market efficient portfolio. And we’ve got some strategies to do that to talk about how we’re going to get to the guarantees today. And number three is how to get to a tax efficient portfolio. And we’ve got the ability to do that, too. So we’re going to talk to those big three things today. But today this show is all about how to get to the guarantees. And by the way, next week we’re going to talk 100% of the time about 401k review. Because there’s so many questions we’re getting about. Foreign investment. Should I do target date funds, rollovers? Is that a tax event for me? All those kind of things.

Ford Stokes:
We’re getting so many questions. We felt like it was important to do an entire show on just 401K and IRA reviews. And so we’re going to do that next on next week’s show. So again, if you want to book a consultation with us and you want to understand a little bit better about how to better plan during this time of runaway inflation, market volatility, etc., I mean, it looks like Sam and I were doing the research looking on yahoo.com. They haven’t come out with a cost of living adjustment yet for Social Security, but it’s estimated that Social Security, the COLA is going to be. 8.7% for 2023. That’s your US government acknowledging that inflation was at least as high as 8.7%. So they’re going to up benefits, Social Security, income benefits by 8.7% starting next year. That’s a remarkable deal. These are the largest increases we’ve seen since 1981. This is definitely something to consider. And if you don’t think. That inflation is higher than 8.7 over the last 12 months. I would beg you to really take a hard, close look at your grocery bill. So. Sam, you’ve got some thoughts to on. On the cost of living adjustment, inflation and what’s going on out there. I just want to kind of bring you into this as well.

Producer:
Yeah, Thanks for you know, obviously we had quite a bit of inflation last year. We saw one of the largest COLA cost of living adjustments that that we’ve seen in some some time. And combine that with what we’re going to get this year and and the value of our dollar is has really gone down. So if you haven’t been able to give yourself some sort of a raise over the last couple of years, aside from Social Security, you’re just not making you’re not bringing as much in as you used to. And with the market being down well over 20% this year, we think it’s such an important time to get in touch with us and get that plan in place. You know, you learn a lot from listening to the active wealth show. And if you miss part of the show, you can always find the active wealth show wherever you to listen to podcasts and you can learn a lot that way. But everyone’s situation is different, which is why we think it’s so important to visit active wealth dot com or give us a call at 770 685 1777.

Ford Stokes:
Yeah, I completely agree. Let’s quickly go into reasons why you should meet with an advisor and a financial professional, but specifically someone who is a fiduciary that’s held to a fiduciary standard as I am. Number one is if you don’t understand what an expense ratio is, you really need to meet with us. You really should consider visiting active wealth dot com and click that schedule a consultation button. The upper right corner number two is if you don’t understand the risks you are taking as measured by standard deviation. Then we would encourage you to go ahead and pick up the phone and give us a call at 770 685 1777. Or if you don’t have a formal retirement plan that includes smart, safe and smart risk investing, smart tax solutions, also smart health and smart care strategies and smart reviews. If you don’t have a smart retirement plan, then I would encourage you to start on the path to do that and all you’ve got to do is visit active wealth dot com and click that, schedule a consultation button and we’ll help you get started. We give you a free portfolio analysis and a free financial plan. Your 95th birthday. With a free Social Security maximization report.

Ford Stokes:
And a retirement income gap plan at no cost to you, and that’s a 1500 dollars value. We would encourage you to just. Visit his doctor. Welcome to get started. On that plan. If you don’t understand how you should manage risk in your portfolio as you get older. Then we’d love to help you follow in that Rule 100. That’s a big deal. Again, subtracting your age from 100 and what’s left over is the amount of money should actually be at risk in the marketplace. Also, if you don’t know if you should pay your house off or not, or if you don’t have a plan for your vehicle or vehicles. During retirement. We’d love to help you there, too. And if you don’t have a health care plan in place, those are all reasons why you should reach out to us at Active Wealth dot com and click that schedule a consultation button. You’ll get booked directly into my calendar and we’ll meet and have a great time together. So let me give you the financial quote of the week. And then next segment, we’re going to we’re going to dive deep into just how to get to the guarantees.

Producer:
And now for some financial wisdom, it’s time for the Quote of the Week.

Ford Stokes:
This quote comes from Robert Kiyosaki. Rich dad, poor dad, guy. Financial freedom is available to those who learn about it and work for it. And the first part of that’s really important. You’ve already worked for it. You’ve already. Save the money. You’ve. Put money away in your 41k. And the company matched and you’ve already built a lot of. The assets you built. Actual assets and I mean not human capital, but you’ve actually built wealth capital. But you’ve got to learn about it. You also need to make sure you’re doing everything you can. To better protect your assets. It’s your money. It’s not anybody else’s money. And. We take that responsibility very seriously. We we work with pre-retirees and retirees and business owners. We work with widows, we work with divorcees. We work with widowers where the gentleman’s wife may have passed away. All of them have one thing in common. They all need one check to last for the rest of their lives. And we take extreme. Care with that check. We take that responsibility extremely seriously. We work very hard to protect and grow the wealth of our clients money with some guaranteed strategies as well.

Ford Stokes:
And we’re going to dive into those here after the next segment. We think it’s really important for you to understand some of the guaranteed money out there and also some of the smart risk money too. And we’re going to go in detail in that right after the break here. Again. Listen, if you’re going to seek information, if you’re going to be a bear, be a grizzly, be aggressive about it. Don’t just say it’s kind of like going to the dentist. I don’t want to see the dentist. I’ll go every couple of years. Don’t do that. You really need to really Inspector Jack’s fact about your retirement plan and communicate with your advisor. We love to communicate with our clients. We care about our clients. We want to work hard to protect and grow the wealth of our clients and also help them build that tax efficient, fee efficient and market efficient portfolio if we can. So we come back to the break. We’re going to talk more about how do you get to the guarantees with your investment portfolio right here on the Active Wealth show on AM 920.

Producer:
Remember, all of Ford’s listeners receive a free financial consultation just for listening to the show. Visit Active Wealth.com to learn more and schedule an appointment. Thanks for listening to the Active Wealth show and subscribing wherever you listen to podcasts.

Producer:
And welcome back to the Active Wealth show Activator. So happy to have you. If you miss part of today’s show, we talked about some important stuff here in the first segment. So check out the active wealth show at Active Wealth Show .com or wherever you listen to podcasts. And we’d like to start off this second segment with a little this week in history.

Producer:
It’s this week in History.

Producer:
So this Week in History, FORD We’re going to hop in a time machine and we’re going to go back about 100 years, almost 1936.

Ford Stokes:
Wow.

Producer:
All right. We’ll post we’ll post Depression era. And on This Week in History, 1936, the Hoover Dam began producing electricity. So if you’ve ever visited fabulous Las Vegas or maybe the Grand Canyon, you may have passed over that bridge over the Hoover Dam. And I’ve heard it’s quite a sight to see. I haven’t made it quite out to the Hoover Dam yet. I’ve flown over it once and it’s it’s quite a large dam. Have you been out there for it?

Ford Stokes:
I did. I went out there in eighth grade on a trip and we got the guide and we had the guy that said, Hey, I’m your dam guide and welcome to the Hoover Dam and all that stuff. It was pretty neat. It’s unbelievable how big that sucker is. And all the rooms that were. Of course, I was in eighth grade, so it was even bigger to me then. 1936. That’s an incredible feat. I thought you would have said 1956. That’s that’s amazing. It’s just unreal what the generations ahead of us did and how they were always striving to improve and not thinking about what can the world do for them, but more of what they can do for the world. And I just I mean, the people in that in that era that truly were the greatest generation, they’re just unbelievable. And I congrats to them. And on the anniversary of the Hoover Dam, that’s a that’s a pretty neat thing. I know it’s a big deal for my dad. My dad was a chemical engineer and one of his best friends was an electrical engineer. And they always talked about the dam all the time in front of me. It was.

Producer:
Pretty cool. Yeah, it’s really inspiring for, you know, my dad and I were just visiting the DMV area and we were up up there walking around Washington, D.C., and it’s such a marvel when you look at these buildings that were produced well over 100 years ago and what Americans were able to do with just a little bit of elbow grease and hard work with tools far inferior to what we have today, what they were able to create, it really is inspiring for all of us Americans today and what we can do moving forward.

Ford Stokes:
I totally agree. You can tell that all of these structures were built on bedrock or built out of rock, right. And steel and and soot. And I would say everybody else kind of needs to do the same thing with their own retirement plan. They need you need to build your retirement plan on bedrock, not on sand. And again, I want to remind you of the financial wisdom quote of the week, which is financial freedom is available to those who learn about it and work for it. You’ve already worked for it. Now it’s time to learn about how you protect and grow your wealth. So we’ve been getting flooded with calls for guaranteed ways to invest and and to generate income for retirement. We’ve been getting flooded with, Hey, Ford, the market’s down 20 plus percent. But I didn’t realize I was going to also lose 13 plus percent on my bonds as well. Thanks to Jerome Powell and the US Fed going up 75 basis points consistently month over month this year. And I just I’ve been I’m really at a loss about what to do. The 6040 portfolio which is the traditional 60% stocks and 40% bonds to build that efficient frontier of investing. It’s failed this year. It’s I mean, you’ve got some people that are in 6040 portfolios have lost over well over 30% this year because of that every trying to get the guarantee.

Ford Stokes:
So I’m going to go through some points here on how to get to guarantees. And I think you’re going to like these a lot. And I think we’ve got I think we have five of them. So we’re going to go through the five ways to get to guarantees. Number one is start with saving smarter. You want to save up to 25% of your income each year so you don’t have to work as long instead of putting money in your checking account as an example that is beyond your six month fund, then let’s invest it into a two year MIGA earning 3.6%. By the way, did you know that we’ve got access to a five year mega, multi year guaranteed annuity that pays a fixed rate? There’s no index linking, there’s no risk in the marketplace and they have to reserve 100% of the money you give them. They’re paying out a 4.95% on a five year MIGA, that’s 4.95% each year over the next five years. If that sounds attractive to you, then I would encourage you to pick the phone up and give us a call at 7706851777 again 7706851777. Imagine how much. Better you will do if you can generate almost 5% on your savings money each year without any market risk. This 4.95% return is based on the claims paying ability of this well known insurance and annuity carrier.

Ford Stokes:
This 4.95% return in and your principal is not at risk in the stock market. That is saving and investing smarter with shorter term savings dollars. Number one is just start saving smaller, smarter. Do something with the money you’re putting in your savings accounts. Don’t just leave it in cash. And if you think you’ve been smarter this year, oh, I went to cash or I went to I put some of this money in cash. You could have been putting it into a two or three or five year MIGA or a fixed indexed annuity, earning a lot more money, and you could have been generating income from it as well. Number two is start with 40% of your nest egg. If you want to get to a guarantee, you want to implement a bond replacement strategy with a tax free and tax deferred income strategy for investing for your own retirement. Let me ask you, why are you paying potentially the advisory fees and portfolio fees? Probably potentially between the 1.25 and 1.5% as you’re driving around right now in Atlanta, Why are you paying that on your bonds? If your bonds are built for generating income, why not just invest in a product that can actually get you income without any of those advisory fees that eliminate the advisory and portfolio fees because the insurance carrier pays me is the adviser a one time fee and then you’re ready to go and it doesn’t come out of your side of it.

Ford Stokes:
That’s they also do that because they want to cap their they want to cap their sales and marketing costs, but also they want to scale faster. So that’s why it’s set up that way. It’s a fixed indexed annuity. So number three is the way to get to a guarantee is invest in fixed indexed annuities to get protected growth that you’ve got market like gains without market risk and you’ll generate income you can never outlive if you get a product with an income rider. And I think Sam is going to help you guys out with how to build your own personal pension chapter from my book Annuity 360 If you want my book annuity 360 all you have to do is visit annuity 360 net that’s annuity 360 dot net and then life insurance is number four. Life insurance is one of the only truly two tax free investments out there available to American pre-retirees or retirees. We prefer indexed universal life insurance or IUL to get you market like gains without market risk. They’re very similar to a fixed indexed annuity. There’s a low cost of life insurance, especially if you’re in your twenties, thirties and forties or fifties. If you’re in your sixties, early sixties, it still can be a good idea if you get into your seventies.

Ford Stokes:
The cost of life insurance too great and not a good idea to do. But once that is satisfied each year you can build cash value within the insurance policy that will grow over time. As the money is linked to a market index. Those indexes are like the S&P 500, the NASDAQ 100, the Credit Suisse Raven PAC, or the Jp morgan Cycle Cycle Index. There’s all kinds of different indices out there. One of the great benefits of ideals is that you can take withdrawals from the policy tax free there in the form of loans because there’s no. Taxes on a loan. The rule is 7702, which is an IRS code. Irs code rule 7702 basically allows for this society also benefits from life insurance. I have life insurance if I pass away. You know, my life insurance will pay out and my wife and kids won’t become wards of the state. So. And before we get to the fifth one here, I want to recap these. So if you want to get to guaranteed ways to invest and to generate income for retirement and you’re tired of running in dealing with the incredible stock market ups and downs, I would encourage you to one. Save smarter. Don’t just leave your money sitting in a checking account or savings account.

Ford Stokes:
Invest it in multiyear guaranteed annuities or fixed indexed annuities and generate market like growth and income from that money. Number two is start with 40% of your nest egg. To replace your bonds in your portfolio. The bonds are down 13 plus percent this year. Why would you suffer that? Why wouldn’t you just take off? Take? Unsystematic and systematic market risk off the table, an interest rate risk and reinvestment risk off the table that are associated with bonds and invest in fixed indexed annuities that do not have those types of risks. Number three is invest in fixed indexed annuities. To get protected growth again, market like gains without the market risk. And then life insurance. Just trying to get two tax free income. Later on during retirement and also have a death benefit to protect your family against you dying. Too early. Listen, annuities are insurance for living too long and life insurance is insurance for living too short. And. We’ve got to get better and get a better plan. We’ve got to get to a new 6040 portfolio. And then number five is if you want to get to guarantees, one of the best guarantees is to kick the IRS out of your out of being your partner in retirement. Kick them out of your retirement account altogether by implementing a Roth ladder conversion.

Ford Stokes:
We’ve talked about this, but we’ve got. You know, a gentleman, his wife, Rob and Janice. You know, he’s got $750,000 in his IRA by implementing a Roth ladder conversion over a seven year period. He’s moving, you know, almost $150,000 for the first four years, and he moves 38,000 over the next few. He’s going to reduce his tax savings. By. 478,000. But his entire tax savings for him and his inheritors is 718,000 over 760,000. Ira It’s a no-brainer. If you want to build a great, smart legacy for your family. Implement a Roth ladder conversion so they can inherit a Roth IRA. Not inherit an inherited IRA. And I think we come back to the break. Sam is going to play a chapter on bond replacement. And later on the show, he’s going to we’re going to play how you can really get a personal pension. Thanks so much to listen to us here on the active wealth show. We’re so glad you’re with us. We really want to pull for all of our activators out there during this time of market volatility and really high inflation and head scratching political management by whoever’s in the White House right now that I’m not a big fan of and we’re pulling for you guys. Come right back from the break and we’re going to talk more about bond replacement and how you can generate an income.

Producer:
Thanks so much for listening to the Active wealth show. Make sure to rate us everywhere you listen to podcasts, including Spotify.

Ford Stokes:
Chapter nine. You can create your own personal pension. Big idea. Using an annuity to create a personal pension helps you create a lifetime income stream, but it also helps you leave a legacy for your beneficiaries. All annuities can create annuity income to supplement the income you need before or during retirement. Those who are approaching retirement are afraid that they will run out of money. But an annuity can help make sure you have an income you can never outlive. An annuity can be a great investment for your portfolio, but encourage you to be careful that you don’t overpay for your annuity When you put your money into an annuity, the annuity company will pay you your money back at a date you specify you don’t want an annuity company to charge you too much to simply pay your money back to you. I’m confident that leaving a remarkable family legacy is important to you. You likely want to have money left over when you pass away to leave your beneficiaries. The goal of a personal pension is to generate lifetime income with no risk that grows your money and allows penalty free withdrawals. An annuity can create a lifetime income with market like gains and no market risk, while also allowing you to build enough wealth to leave for your beneficiaries when you pass away. Don’t give the annuity company fees for doing nothing. We prefer fixed indexed annuities for our clients that do not have an income rider fee, but you can still create a personal pension without an income rider on your annuity.

Ford Stokes:
If you get an annuity with an income rider but don’t utilize the features of that income rider, then you are not getting what you paid for. You are literally just paying the annuity company 1 to 2% each year. You defer annuities in your annuity without receiving a single benefit for that annual fee. This income rider fee will also draw down your account value or principle, depending on how that index is performing. The growth on your entire account value could be significantly and negatively impacted. Some accumulation focused annuities are built to deliver increasing payments without an income rider. You should consider the features your income rider is providing you before deciding to purchase it as an add on. Make sure you utilize the features you are paying for more ways to get the most out of your annuity. The longer you wait to turn on the annuity, the more you’ll receive an annual payments. This is because your annuity will spend a longer time in the accumulation phase, meaning it will spend more time building up your account value. Your annual payments will grow as your account value grows. Believe it or not, you can generate your own personal pension by distributing no more than 5% a year with penalty free withdrawals from your accumulation based annuity policy. Many accumulation annuities are set up to be RMD friendly, so you won’t suffer a penalty when you have to take your RMD.

Ford Stokes:
It would be silly for you to be penalized for something you are required to do. Annuity companies take this into account by creating products that make taking your RMDs easier. Inspect what you expect with any annuity. Don’t just go with what the annuity agent or advisor tells you. Read it for yourself. Specifically, you should read the annuity illustration guaranteed and non guaranteed tables included within the annuity illustration. Also, please remember that annuity policy is a contract between you and the annuity company. So caveat emptor or buyer beware applies here. Be aware of the annuity you are buying and choose an annuity that works best for you. They will help you build a successful retirement and they’ll offer you peace of mind whether you choose to generate income through penalty free withdrawals or invest annually in an income rider. Know the consequences of both. This is a decision you will make at the beginning of the investment process. One poor decision here can cost you 1 to 1 and one half percent of annual growth over a 30 year retirement. This could come out to be a significant loss. Educate yourself on your options and the specifics of each option you are considering. Making the right decision up front will save you a lot of frustration in the long run. Also, please remember that if you withdraw too much annually, say 10%, you will run out of money in 10 to 12 years.

Ford Stokes:
Make sure that you’re working with an advisor who can help you choose the appropriate withdrawal amount so that your money lasts for your entire lifetime. As discussed above, we recommend no more than 5% be withdrawn each year from your account. Chapter 15 bond replacement with fixed indexed annuities. Big idea. Historically, bonds have seen volatility when the market is volatile. Fixed indexed annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial advisor talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. Am I firm active wealth management? We believe this is a smart way to protect your future. Many people have learned that bonds are a safe way to invest your money, but there are some downsides to bonds that should make you think twice. We’ll talk about some reasons why you should consider replacing your bonds with annuities first. Here’s some information on the history of bonds in the United States. Historical bond volatility. The 1900s saw two secular bear and bull markets in US fixed income. Inflation peaked at the end of World War One and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The US government kept bond yields artificially low until 1951.

Ford Stokes:
The long term bond yields were at 1.9% in 1951. They climbed to nearly 15% in 1981. In the 1970s, globalization had a huge impact on bond markets. New asset classes such as inflation protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created. Early investors in these new asset classes were compensated for taking on the challenge. The bond market was coming off its greatest bull market coming into the 21st century. Long term bond yields declined from a high of 15% to 7% by the end of the century. The bull market in bonds showed continued strength in the early 21st century, but there is no guarantee with our current market volatility that this will hold. See Chart 15.1 To see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this Why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history alone, you can see how uncertain the future of bonds is. Inflation and fluctuating interest rates play a big role in bond yields. Interest rate, risk of bonds, bonds and interest rates have an inverse relationship. When interest rates fall, bond prices rise. Due to the COVID 19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option.

Ford Stokes:
However, this has caused bond yields to fall to all time lows. As of May 24, 2020, the ten year Treasury note was yielding 0.64%, and the 30 year Treasury bond was at 1.27%. Reinvestment risk of Bonds. This is the likelihood that an investment’s cash flows will earn less in a new security. For example, an investor buys a ten year, $100,000 Treasury note with an interest rate of 6%. They expect it to earn $6,000 a year at the end of the term, interest rates are 4%. If the investor buys another ten year note, they will earn 4000 instead of 6000 annually. Consider the possibility that interest rates change over time when deciding to invest in bonds. Systematic market risk. This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpredictable and it is impossible to avoid. Diversification cannot fix this issue, but the correct asset allocation strategy can make a big difference. Unsystematic Market Risk. This type of risk is unique to a specific company or industry. Similar to systematic market risk, it is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes coming to the industry. However, there is no way they can know how those changes will affect the market.

Ford Stokes:
There are two factors that contribute to company specific risk. Business risk. There are two types of risk, internal and external. Internal refers to operational efficiency. An external would be similar to the FDA banning a specific drug that the company sells. Financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading. Reduced advisory fees. Investors who trade individual stocks may know how much commission they are paying their broker. But individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds they sell called markups. But they bundle them into the price that is quoted to the investors. This means you are unaware of how much commission you are actually paying. Standard and Poor’s estimates of bond markups is 0.85% of the value for corporate bonds and 1.21% for municipal bonds. However, markups can be as high as 5%, up to $50 per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time, unlike an annuity which provides income for life. You must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss. As we discussed above, annuities will provide you with an income you can never outlive.

Producer:
Where’s the best place to hang your hat when you retire? I’m Matt McClure with a retirement radio network powered by Amerilife. Whether retirement is just around the corner or several years away. Time is ticking on planning not only your finances for your later years, but where you want to live out your post-retirement life. Personal finance website wallethub recently released its list of best states to retire in 2022.

Jill Gonzalez:
Florida, unsurprisingly, ranked number one, followed by Virginia. Colorado, Delaware and Minnesota.

Producer:
While at heart analyst Joe Gonzales.

Jill Gonzalez:
The top ten continues with North Dakota, Montana, Utah, Arizona and New Hampshire.

Producer:
So what makes a state one of the best to retire in?

Jill Gonzalez:
The study was based on 47 metrics, including tax friendliness, the elderly population, golf courses per capita and shoreline mileage.

Producer:
As for Florida, which landed the top spot this year.

Jill Gonzalez:
Florida excelled in tax friendliness, fellow retirees and things to do, but could use improvement with home health aides per capita.

Producer:
Even though the Sunshine State is number one overall, If finances are your primary concern, you might want to consider a move to Mississippi. It ranked as the state with the lowest overall cost of living. As for tax friendliness, Alaska jumps to the top of the list. But what if you want some culture in your retirement years? New York ranks as the number one state when it comes to the number of museums per capita. The tradeoff there is naturally, the Empire State is one of the most expensive in the country. So where do you want to spend most of your time in retirement? And what factors are most important to you when considering a potential move? Those are key questions to consider as you plan for the future. With the retirement dot Radio Network powered by Amerilife. I’m Matt McClure.

Producer:
Listen to the number one show on the weekends on AM 920. The answer. To protect and grow your hard earned money. The Active Wealth show with Ford Stokes, your Chief Financial Advisor, Saturdays at 12 noon and Sundays at 11 a.m.

Ford Stokes:
Chapter 13 The Annuity That is just right The fixed Indexed Annuity. Big idea. A fixed indexed annuity gives you a portion of market like gains without market risk. Your investment is tied to an index but not directly invested in it. How does it work? And fire gives the owners or annuitants the chance to earn higher yields than fixed annuities. When the index they are tied to performs well, they typically will also provide some protection against market declines. The rate on an fire is calculated based on the year over year gain in the index or the average monthly gain over a 12 month period. Fires often have limits on the potential gain at a certain percentage. This is known as the participation rate. The participation rate can be 100%, which means the account would be credited with all the gains, or it could be as low as 25%. Most FIIs have a participation rate between 80 and 90% benefits Guaranteed income stream. With Americans living longer and spending more time in retirement, many retirees are concerned about outliving their savings. In turn, they’re searching for a product that can help ensure a steady income stream. Fas are designed with guaranteed lifetime income so you can never outlive your earnings diversification of portfolio. A balanced portfolio is essential for managing risk and reward in the financial market. Designed for the long term, FAS are a great retirement vehicle to ensure you are not putting all your eggs in one basket phase, Offer the ability to make some money without the risk of losing it.

Ford Stokes:
Secure Principle. Even with market volatility, investors will not lose value on their fixed indexed annuities. Your savings aren’t exposed to market fluctuations, so even in a negative market return, you will not fall below zero. You can never lose your interest once it is credited to your principal. Tax deferred growth fears offer long term tax deferred savings. As long as your money stays in the annuity, you will not be taxed on the interest earnings. Once you receive a payout, the annuity will be taxed just like ordinary income predictable earnings. Because fees offer predictable income, Americans feel more comfortable when withdrawing funds from these retirement vehicles as opposed to an IRA or for one K. Choosing an fire is an efficient way to plan for your future. As your interest earnings rate always remains somewhere between the interest rate floor and the cap. No matter what happens to the market, you can still count on payments throughout your golden years. Potential drawbacks of fixed indexed Annuities Surrender Charges. A surrender charge is a type of sales charge you must pay if you sell or withdraw money from a fixed, indexed and even a variable annuity during the surrender period, a set period of time that typically lasts 6 to 8 years after you purchase the annuity, surrender charges will reduce the value and the return of your investment withdrawal limits.

Ford Stokes:
Almost all fixed indexed annuities play surrender free withdrawal limits within the annuity contract that generally range from 5 to 10% of the principal. While all annuities must be armed, friendly and provide for a penalty free withdrawal from a qualified annuity account equal to the RMD requirement for the client’s age carriers, limit the amount of withdrawal to enable them to grow the money invested for themselves and the client not suitable for short term investing. If you want to grow your money, but you also need access to 100% of your money than a fixed indexed annuity may not be right for you. Chapter 16. Reduce risk in Your Portfolio with annuities, Big idea and annuity can protect against several risks that can affect retirees and pre-retirees and offer a better financial safety net than other investment types. One of the biggest benefits of investing in annuities is reducing risk in your portfolio, with current market volatility, pre-retirees and retirees are more concerned than ever about their retirement funds and protecting their hard earned wealth. We believe that annuities can be the answer to risks in your portfolio. Longevity risk. Retirees and pre-retirees are concerned about outliving their wealth. We have offered some strategies in this book that will stretch your retirement funds, such as following the 4% rule.

Ford Stokes:
But annuities can offer even more protection against this fear. We are living longer, so it is important to plan for at least three decades of retirement. An annuity can help create an income you can never outlive. Your money will last for your entire retirement by utilizing monthly, quarterly or yearly distributions from your annuity account after your money grows during the accumulation phase. Market risk Fixed index annuities can protect you from market risk. These annuities are not actually invested in the market. They are only tied to a specific market index. This means that you enjoy all the benefits of your market index when it performs well, but you are not exposed to any of the market risks. Should your index perform poorly, you will either make. Money or remain flat. You will never lose any money. Zero is your hero. Inflation risk. Annuities can offer riders that can help you adjust for inflation, even though a rider might reduce your payout. Protecting yourself from inflation will ensure that your money lasts and is not exposed to any unnecessary risk. It is important to have an annuity with a payout linked to the Consumer Price Index or CPI instead of one that increases at a fixed rate each year to ensure you are protected against inflation risk. An annuity that increases at a flat rate each year does not offer sufficient protection against inflation.

Ford Stokes:
Sequence of return risk. An annuity with a lifetime withdrawal benefit can counteract the effects of a down market at the start of your retirement. Research conducted by Retire, one has shown that you can flip 15 years of returns from retiring during a recession to retiring during a market that is up and completely change your retirement outlook. The positive returns would offset your withdrawals and grow your assets before your account felt the effects of a negative return. Consider a smart, safe plan. With a smart, safe plan. Your money is invested not in the market. The characteristics of investing not in the market include growth with safety market upside limited to no downside. Principal and gains protection low cost 0 to 1% annual fee time horizon of 7 to 14 years can earn 5 to 7% annually. Options are available for guaranteed income. Here are some examples of not in the market investing bank CDs. The annual percentage yield RPI is about 1 to 2%. Your time horizon is typically 1 to 3 years and you cannot access the funds until the contract is up. Treasuries, the APY is about 3%. Your time horizon is ten years and you cannot access the funds until the ten years is up. Fixed annuity. The annual percentage yield is between three and 4%.

Ford Stokes:
Your time horizon is typically 4 to 7 years. You are able to access the funds during the contract period. Multi year guaranteed annuities or minus, you get between two and 4% growth on your principal depending on the duration of your policy. This is less growth than a fixed indexed annuity, but it is guaranteed the annuity company is required to pay you the rate they promise for the duration of your policy. Fixed indexed annuities you receive between five and 7% growth on your principal. The time horizon is 7 to 14 years and you do have access to the funds in your account if you need them. A smart, safe plan does not invest your money directly in the market. Your investment is tied to an index without being invested directly in it. This means that you get a portion of the market gains. Without the market risk. You may want to consider investing in a fixed indexed annuity over other not in the market options. If you invest in Treasuries or CDS, you will lose ground in your investment due to inflation. Investing in a fixed index annuity will likely cut down on your inflation risk. We prefer accumulation annuities because they minimize your risk in several areas and they lock in your gains through the use of point to point protection periods, meaning you won’t lose money. It’s the final.

Producer:
Countdown. So let’s recap what you may have missed. It’s the final countdown.

Ford Stokes:
And now, Sam, let’s play the final countdown to the folks. So here’s what you might have missed, or at least what you’ve heard on this week’s show. We talked a lot about how to get to guarantees. Investing and guaranteed income is one. Start saving smarter. Save up to 25% of your income each year, but also invest your savings dollars in a better way and consider taking that savings account money and putting it into a multiyear guaranteed annuity that’s got a short surrender period of, say, 2 to 5 years. Our five year multi year guaranteed annuity is paying 4.95%. If you want to get access to that product, we’re happy to help you. All you’ve got to do is reach out to us at active Walmart.com and click a schedule or consultation. Button number two is start with 40% of your nest egg as a bond replacement strategy. And number three is invest in fixed indexed annuities to get market like gains without market risk where they have a 100% financial reserve requirement on those products. Number four is life insurance. Try to get to tax free income through life insurance. And number five is invest in a Roth ladder conversion plan. And what I mean by investing in that, you would convert your money from your IRA to your Roth IRA, but you do have to pay the taxes each year on the amount that you convert. And so that’s an investment in the future by kicking the IRS out of being your partner in retirement.

Ford Stokes:
We also read the Financial quote of the week, which is financial freedom is available to those who learn about it and work for it. From Robert Kiyosaki, the rich dad, poor dad, author. And listen, if you’re going to be a bear, be a grizzly about your retirement planning. Also, if you want to get a copy of my free book Annuity 360, all you got to do is visit annuity 360 dot net That’s annuity 360 dot net and we’re happy to Deborah and the team we’ll send you out a free hard copy of my book and we hope everyone has a great week. We’re doing everything we can to help educate and better protect you during this time of market volatility and inflation and head scratching political leadership in Washington right now, I’m not a fan of who’s in the White House right now. I’m just not and I know many of you aren’t either. And if you’re not, we’d love to hear from you as well. Next week, we’re going to talk all about what to do with your four on KS and your IRAs. We’re going to do a41k review right here on the show to give you everything you need to consider to rebalance, reallocate and optimize your 41k and your IRA. And have a great week, everybody.

Producer:
Thanks for listening to the Active Wealth show. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free consultation, call your Chief Financial advisor Ford Stokes at 770 685 1777 or visit Active Wealth dot com. Investment Advisory Services offered through Brookstone Capital Management LLC become a Registered Investment advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BC, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated are not guaranteed. Past performance can not be used as an indicator to determine future results.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity. Contract guarantees are backed by the financial strength and claims paying ability of the issuer. Registered investment advisors and investment adviser representatives act as fiduciaries. For all of our investment management clients, we have an obligation to act in the best interests of our clients and to make full disclosures of any conflicts of interest, if any exist. Refer to our firm brochure the ADV two A page four for additional information, any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by BWR.

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