How to Delete Fees and Avoid Probate with Your Retirement and Estate Plans

7.21.23: Audio automatically transcribed by Sonix

7.21.23: 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.

Speaker3:
And welcome the active wealth show activators on Ford Stokes, Chief Financial Advisor. I've got Sam Davis here, our executive producer with us. Sam, say hello to everybody.

Speaker4:
Welcome to the weekend activators. So happy that you've chosen to join us once again. And don't forget, check out our podcast. If you've missed any of our recent episodes, you can find the Active Wealth show. Wherever you listen to podcasts and choose whichever topic you want to learn about on demand whenever you're ready.

Speaker3:
Yeah, it's good stuff. I'll tell you, we've got kind of more of a guarantee. Kind of show today. We're going to be talking about trying to reduce your fees and trying to get more market efficient. Now, it's not a guarantee that you can get, you know, read the tea leaves and get incredibly market efficient unless you're going to move money into like from bonds into a fixed indexed annuity. So that's one of the strategies to get more market efficient if you're going to get to zero risk. Without your money being invested in the market. Because when you invest in a fixed indexed annuity, you and you're not investing your money into the stock market, you're investing your money into ten year US Treasuries and. But the main thing we're going to talk about today is how to reduce your fees. And we're going to have the quote of the week. We're going to give a quick market update. We've got an interesting story about a multi-million dollar estate and a will that was hidden in a couch that you're going to hear that great story because she's a very famous singer.

Speaker3:
And we're also going to. Ask, you know, hey, are you paying too much in fees? And we can help you find out. Help you understand what your expense ratio is, tell you how to calculate your expense ratio within your portfolio because your expense ratio doesn't actually show up on your statement. And it should, but it doesn't. And we've got this week in History with a little automotive history. We also just want to say thank you to the activators out there, to our loyal listeners. Thanks for making us the number one listen to radio show on Am 920. The answer on the weekends. It's a big deal for us. Obviously, it's a big deal for us because it's a big deal for you because you guys are kind of setting it to appointment radio for. You mean so many of you are listening in? And from 12 to 1 on Saturdays or from 11 to 12 on Sundays. And we appreciate you. Sam, why don't you go ahead and share the financial wisdom quote of the week.

Speaker5:
And now wholesome financial wisdom. It's time for the quote of the Week.

Speaker4:
All right. This week's quote comes to us from the genius himself, Albert Einstein. We've heard him on the quote of the week before talking about how compound interest is the eighth wonder of the world. But this one comes from Albert Einstein. And he once said, The more I learn, the more I realize I don't know.

Speaker3:
I mean, it was the amen on that. Right. And we've always encouraged everybody here. If you're going to seek knowledge about retirement and about investing, if you're going to be a bear, be a grizzly, be as aggressive as you can be about getting as much information as you can, at least about your own internal portfolio, like what are you dealing with with advisory fees and portfolio fees? What is your expense ratio? What is the standard deviation, which is a measurement of risk within your portfolio? What is the correlation of all of your assets to each other, at least your top 20 holdings? We can help you with all of that and we'll offer you a free financial plan and portfolio analysis. Absolutely no cost to you. It's a $1,500 value. I want to repeat that again for the folks, Sam, it's $1,500 worth of value because you're going to get five things you're going to get. Number one is you're going to get a portfolio analysis. You're going to understand the risk you're taking and the fees you're paying with your current portfolio. Number two is you're going to get a Social Security maximization report. Absolutely at no cost to you. And we're going to help you understand your three bend points. We're going to help you understand when is probably the best time for you.

Speaker3:
And it's always different and always customized. When when is the best time for you to turn on your retirement income to turn on that? To turn on that Social Security income benefit, if you will. And so we're going to help you do that. That's number two. Number three is we're going to give you a financial plan to your 95th birthday. Absolutely. At no cost to you. And we're going to do that with your current portfolio. That has nothing to do with us. We're going to make sure that we're giving you, hey, here's what your current plan looks like. Then number four is we're going to give you a retirement plan to your 95th birthday with our recommended portfolios. And then number five is we're going to give you a retirement plan, your 95th birthday. With a Roth ladder conversion that is customized for you to help you save. Six figures or more during retirement and reduce taxes paid over your 30 plus year retirement. If you've got over $400,000 in an IRA, it's almost a mathematical certainty that if you do a Roth letter conversion over a 3 to 7 year period, generally it settles in right at five years where you move a little bit of money for your IRA to your Roth IRA each year and you pay the taxes on the money you move in the years that you move them.

Speaker3:
But you're going to take your tax bite early and then you're you're going to kick the IRS. You're going to delete the IRS from your portfolio. And they will no longer be your partner with that Roth IRA. And if you're driving around Atlanta right now and you're heading to Home Depot or Lowe's, you're heading to Publix or Kroger, you're going to a kid's soccer game or a kid's baseball game or. Travel. Travel Baseball. Travel. Soccer. Travel. Softball. Or you're heading to cheerleading Practice. All stuff like we do. I would just strongly urge you to consider getting this $1,300 value, getting a full portfolio analysis and retirement plan at no cost to you. We're also going to help you understand if you have a positive retirement income surplus or you have a negative retirement income gap in. And by the way, I've got another piece of news for you. If you've got a negative income gap during retirement, it's going to widen over time as inflation grows. So you want to really start. Off really well and that that red zone of retirement, the first five years before retirement and the five years after you retire because you're going to finish how you start.

Speaker3:
And it's a really important deal to consider. So we look forward to helping you with that. All you've got to do is reach out to us at (770) 685-1777. Again, that number is (770) 685-1777. Or you can visit active wealth.com and just click that schedule a consultation button in the upper right corner of our website. Again, there's a schedule, a consultation button in the upper right corner of our website. And you get booked directly into my calendar. So all you've got to do is click that. It's easy, breezy, lemon squeezy. And you know, it's a good it's a good term. Sam for summer right. So for for lemonade and let's do everything we can to kind of seek to understand what's going on with our retirement portfolio. If you've been listening to us for a long time, we had several long time listeners call in for the first time this past week and, you know, just want to give a shout out to Brett, want to give a shout out also to Aseem and also want to give a shout out to Julie and Ray as well. And we really appreciate you guys and gals reaching out to us this past week, and we look forward to working with you.

Speaker6:
It's this week in history.

Speaker3:
And Sam, why don't you give them a little bit of this week in history?

Speaker4:
Yeah, this is an exciting one. So kind of has something to do with you forward. But it it's the Ford Motor Company This Week in History, 1903, the Ford Motor Company sold its first automobile. So congrats to the Ford Motor Company, 120 years old. 1750 models of its first vehicle were made from 1903 to 1904. That Ford vehicle came equipped. It was a two seater and it was sold for an average of $850, and the car weighed a little under £1,300. And it reached a peak speed of get this, Ford buckle up, 28mph.

Speaker3:
That's amazing. What's what I love is you could get the Model T Ford in any color you wanted as long as it was black. So yeah, that's good.

Speaker4:
And I say I say buckle up. But, you know, thinking back, they probably didn't have seat belts quite yet at that point in 1903. I think that was something they thought of later.

Speaker3:
Yeah, And we're probably on the cusp of some of that, you know, with electric vehicles. I drove a Ford Mach-e for the first time last week when I got my oil change and my Roush Ford F-150 and shout out to the Roush folks who made a great truck on the Customize the Ford F-150. And I got to tell you, that thing was wicked fast and almost unnaturally fast because the torque is just sitting right there. And I felt like I was just driving. A golf cart or a, you know, or like a really nondescript rental car that you'd get, you know, when you're out on vacation. But it was so quiet. It was just so quiet. And it it had a frunk and had a front trunk. So that was interesting. You could put like a small cooler, a small bag in there. And I mean, it's it's a heavier car. It's beautiful. They've done a great job with those marquees. And it was, it was just fun to drive and shout out to the Ford Motor Company for getting that done. I wish it did have more to do with me. I'm not sure how far back my relationship with my relations with Henry Ford Senior actually go, but I think they do go back a long, long way. It's not not immediate, unfortunately. And, um, yeah, but we're we're a Ford family. We pull we pull for the Ford Motor Company.

Speaker4:
Yeah. The Ford Motor Company continues to innovate. Thought that was an appropriate item for this week in history, but we've reached the end of segment one and the Active Wealth show will be right back.

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

Speaker7:
Charlie Kirk here. If you're concerned about your investments, rising taxes from the Biden administration, then I encourage you to listen to the active wealth show hosted by my good friend Ford Stokes right here on Am 980. The answer. Listen to the Active Wealth show Saturdays at noon and Sundays at 11 a.m. The active Wealth show right here on Am 980. The answer Investment.

Producer:
Advisory Services offered through Brookstone Capital Management, LLC, BCM, a registered investment advisor, not an actual client of active wealth management.

Speaker3:
And welcome back to the active wealth show Activators. I'm Ford Stokes, your chief financial advisor. I've got Sam Davis, our executive producer, here with us. Your active wealth market update. And we've got some market update trying to share some good news here. Wages are finally rising faster than prices. Americans growing paychecks surpassed inflation for the first time in two years, providing some financial relief to workers while complicating the Federal Reserve's effort to tame price increases. If the trend continues, it bodes well for the US economy to avoid a deeper recession. Inflation slowing due to a recovering supply chain as well, and the early days of pandemic. Americans stuck at home ordered lots of TVs, computers, furniture and other goods. Meanwhile, many truck drivers, along with port and warehouse workers, left the workforce for Covid related reasons. That led to severe product shortages and price spikes as shipping containers stacked up at West Coast ports. Many of the pandemic era supply chain snags have been eliminated. Stocks are riding a positive wave through the first half of 2023, following a significant dip in major stock market indices in 2022. Most have rebounded well through the first half of 2023. The S&P 500 is up 16.4%. The Dow is up 3.84% and the Nasdaq is up 32.7%.

Speaker3:
And listen from our listeners, if you haven't heard from your advisor lately or you simply aren't receiving the attention you deserve through your work based retirement plan, let us provide you with a great service, with a complimentary consultation and a free financial plan and portfolio analysis. Again, it's that 1000 hundred dollars free offer at no cost to you. We'll provide you that comprehensive financial and retirement consultation at no cost for all of our activators, all of our active wealth show listeners. And again, as always, there's no obligation. We only want you to work with us if it's best for you. We'll show you exactly how much you're paying in fees. And again, where you can cut costs through strategies like bond replacement, personal pensions and smart tax strategies like a Roth ladder conversion. And you can also reach out to us at active wealth.com or you can give us a call at (770) 685-1777. Again (770) 685-1777. To schedule your free financial consultation today and we will tailor a plan for your specific situation and needs. And now, Sam, I want you to give us a really interesting estate and will situation. There's a will found in Aretha Franklin's couch that received respect from the jury just recently.

Speaker4:
Listeners here in Atlanta may remember when Aretha Franklin passed away. That was actually five years ago. That was in 2018. Well, since then, they've been in the courts. They've been in probate. They've been trying to figure out which of three informal wills which were found in Aretha's home should receive precedence over the others because she did not have a formal estate plan. She did not file a will properly. She had, in fact, filed her will on a spiral notebook in her couch. So the jury had to figure out which one of these wills was going to be the one that would lead how the estate should be divided up. And, you know, one of the wills was more equitable while others favored certain sons. She has four sons, but the jury has decided a jury in Pontiac, Michigan, has decided that the one that was in the couch is the legal one. And Ford, we definitely encourage the activators out there to not file their will in their couch and to make sure that they go through the proper channels because, you know, estate planning is not just for Aretha Franklin. It's not just for the wealthy. If you have a home, if you have a car, if you have any savings at all, you have an estate. And if you want that to be divided up the way you would choose and not the way a judge or the way the state would choose, you need to do the proper filing to make sure that's going to be carried out.

Speaker3:
Yeah. And we're able to work with a licensed attorney here in the state of Georgia that can give you a low cost, will also lower cost trust. If you want your family to avoid having to go through probate. A trust is a great way to go. It also with a trust there's no creditors with a trust helps kind of eliminate some of that credit card debt that might need to be paid off or things like that. Um, I would just encourage people to go ahead and reach out to us at active wealth.com, click that schedule consultation button and we can actually get you a full consultation with a licensed attorney here in the state of Georgia. We're not going to be sharing any. Any fees with attorneys or anything like that because that that's not proper. We're going to make sure that you get introduced to a licensed financial get get you access to a licensed attorney here in the state of Georgia who specializes in estates, wills and trusts. But I think you're going to be surprised at how low cost. It's something that we're just we're launching this new partnership this week with the active wealth show and active wealth management and kind of coincide with us moving up to Alpharetta to our location near Halcyon on Exit 12. And we bought Sam. We bought a building excited and no longer be a tenant and actually be our own landlord. It's it's nice to own our own building and I really encourage people if you've got questions about really, should I get a will and or and a trust or what should I do? I would encourage you to just reach out to us and just schedule a consultation with us by going to active wealth.com and click that schedule a consultation button, you'll get put directly into my calendar.

Speaker4:
Absolutely. And any activators who have questions about estates, wills, trusts, anything at all regarding their finances should definitely take advantage of that complimentary consultation. Forge You're a fiduciary, which means you have to sit on the same side of the table as the people that you serve and you're able to provide advice that's going to be best for them. And when you provide that plan, they can take that plan and choose to work with you or choose to do whatever they want and work with someone else if they wish. But definitely take advantage of that complimentary consultation and get your questions answered.

Speaker3:
Yeah. Also, so many folks are like they were their advisor was kind of worried about trying to share rates of return maybe, or how much they've gotten their nest egg. But they don't have an overall plan. They don't have a plan for Medicare. And we can get you in touch with some folks that are licensed to do that. A plan for legacy for estates or wills, and we can get you in touch with a licensed estate attorney that's going to charge less because they get access to more of our clients and they're excited to pass on the discount to our clients at a. Here at Active Wealth, which is great. And then but then you can get an overall plan on smart. Smart tax plan. So you can do a Roth ladder conversion or you can reduce the bonds in your portfolio and therefore reduce the risk in your portfolio with what we do for a living, which is do financial planning and wealth management. And we've also got access to things like structured notes, we've got access to things like fixed indexed annuities that are both great bond replacement products to consider and. We also do tactically and strategically manage portfolios each and every day. And our registered investment advisory firm Brookstone Capital Management, has over $8.5 billion in assets under management. Mark Diorio is our Chief investment Officer. He is a CFA. He's got a team of CFAs that that manage the portfolios that we would that we place our clients in and we just really appreciate you activator's listening to us and caring about us and, and being loyal listeners. But also if you've been a long time listener, you know, I think today's the day. Go ahead and pick the phone up and give us a call at (770) 685-1777 again (770) 685-1777. To schedule your personal and custom complimentary financial and retirement consultation to receive your Social Security maximization report to receive your portfolio analysis and all of your financial plans to your 95th birthday. Complete it with a Roth ladder conversion plan as well. Because remember, it's your money. If it matters to you, it matters to us. We're here to help you.

Speaker4:
Yeah. And one thing I want to mention as well for before we go to a break, you know, ever since the Act of Wealth show started four years ago, we've been all about education and really helping all of our listeners understand what's going on with their finances. And one way that we can help educate you and again, it's all for free. We're not trying to sell you information. We want to give you the knowledge that you need to make the best decision possible. You wrote a book three years ago for the Annuity 360. We've continued to receive requests from listeners who want to get their hands on that book and read and start to understand a bit more about that asset class. And we're going to play some chapters from that book in this week's show. But could you tell the folks how they could get a copy of that book today?

Speaker3:
Yeah, the best way to get to get a free copy, a free, hard copy of. Annuity 360 is to go ahead and visit annuity 360 net. That's annuity 360 net. And it's just the number 360 after the word annuity. So annuity 360 net and. It. That book is very relevant today. We wrote it kind of as an evergreen way of looking at it, and the products have gotten even better since then, since Covid, because the interest rates have gone up, the ten year US Treasury yield has gone up and therefore annuity companies have more dollars to work with, more interest dollars to work with those growth dollars on the principle you give them at the end of year one, end of year two, end of year three, and they can invest into options to help protect and grow your assets. Also, remember, with a fixed indexed annuity, your money's not invested in the stock market at all. It's invest. They invest that money into the ten year US Treasury and then they take the interest that's generated by the end of year one and grow your money. That way. They take a portion of the gains of that growth and they give you the lion's share majority of that growth. Pretty remarkable. We've got some products that have got a 325% participation rate. They're also offering an immediate bonus of 20%. That's really attractive. It could also help help backfill some of the losses you may have incurred last. Year, with the Nasdaq losing 24.2% of its value. So I would encourage you to go ahead and reach out to us at active wealth.com.

Speaker3:
That's active wealth.com and Orlando or just give us a call at (770) 685-1777. But you can get my free book annuity 360. It's a hard copy of the book. I'll sign it for you. Um. And you can go ahead and get that at annuity 360 dot net. We appreciate all of our listeners, all of our activators out there, and we look forward to playing a couple chapters from my book this week. Welcome back to the active wealth show. I'm Ford Stokes, your chief financial advisor. I've got Sam Davis here, our executive producer with us. And we're also talking about fees. So we want to reduce the fees. It's more of a guarantee when you reduce fees out of your portfolio, you're going to hold on to more of your dollars and therefore your investments are going to be more efficient. But bottom line is we're trying to become more efficient within your portfolio. And one of the best ways to do that is to understand your expense ratio. And if you don't know what an expense ratio is or you don't know what your expense ratio is, either way, you probably need to reach out to us at (770) 685-1777 again (770) 685-1777. Or you can visit active wealth.com. So here's what an expense ratio is and here's the expense ratio formula expense ratio can be found by performing the simple calculation you take your expense ratio and that equals management fees on top and you divide that by the total investment of the fund or the total investment in the fund.

Speaker3:
So if you've got $1 million and you're paying, you know, $10,000 in fees a year, that's a 1% expense ratio, which is really typical of what a 401 K is because they've got mutual funds in there that have things like 12 B1 fees that are marketing fees. They've got a share fees, which is fees you pay on the front end when you purchase the mutual fund or they've got C share fees which are ongoing fees. Instead of paying an upfront mutual fund fee, you pay over time that you hold it. And these mutual fund companies are they don't spend a lot of money marketing, which is what those fees are allowed allow them to do. What they do is they take that money and that's their profit, that's their income for the fund. And we would just say this we just all of our listeners should ask themselves this important question How much am I paying in fees on my retirement savings? I mean, do you know what your advisory and portfolio fees are? Do you know what your internal expense ratio is? Those are three different distinct fees that are coming out of your portfolio and only two of them show up in your statement. The expense ratio only shows up in the bottom line value of your portfolio. They disclose the expense ratio within the prospectuses for all of the mutual funds that you own, and I would encourage you to consider exchange traded funds instead of considering mutual funds because in exchange traded fund is far superior to a mutual fund in two big ways.

Speaker3:
Number one is it's much lower in fees. They don't have the 12 V one fees. It's much lower in fees. Number two is you can trade ETFs within the day of trading intra day with mutual funds. You have to wait till the end of the day's trading That assesses a net asset value and then you can start market to sell your your the shares in the mutual funds. And also, if you don't know the answer to this question or can't quickly pull it up. You owe it to yourself to find out, and you ought to reach out to us at active wealth.com. But again, that question is how much am I paying in fees on my retirement savings? If you don't know that question, you really should reach out to us. We're happy to help you. You want to understand how much you're paying in management fees on your savings. Also, many have no idea that their old advisor was overcharging for the management of their assets. We had a client. Come back to us after she didn't realize we had moved over to Brookstone Capital Management. She got lost in the shuffle. We tried to reach out to her, but she had moved and and we'd lost her and her phone number had changed. And then she finally found us and came back to us. And she couldn't believe that her advisor was charging her 1.35% when we were charging 0.95% and she was blown away.

Speaker3:
That that had happened to her. And she'd for three years she'd been overpaying. And that's just money that she would have in her account if she'd stayed with us. They'd never been told the fees that they were paying on the assets, such as target date funds, mutual funds, bonds and other types of assets were exorbitant. And that was another thing that we can help people with, especially people that have 401. Ks. Usually when you get A4K, you select your allocation. When you first start working, you never touch it again. That's just forget it. You know, invest it and forget it. Right? That's just hang in there approach. That's just buy and hold. It's not usually the best policy you want to really kind of rebalance. And that's why we tactically manage our portfolios and rebalance on a monthly basis with our portfolios. We will do 50% strategic, which is once a year when we'll rebalance and then we do tactically managed portfolios, which is at least on a monthly review basis. If you're tired of worrying about your future and you're ready to work with someone who sits on the same side of the table as you, give us a call at (770) 685-1777 or visit our website active wealth.com. We generally love meeting with our listeners and helping them get on the road to their successful retirement. All will cost you is a little bit of your time and as always, there's no obligation.

Speaker4:
And we want to go ahead and play a chapter from your book, Forward Annuity 360. And this kind of focuses on replacing those asset classes that are riddled with fees that could be holding back your investments. This chapter is on bond replacement with fixed indexed annuities and after the chapter. We'll be right back.

Producer:
Thanks for listening to the Active Wealth Show. If you like what you're hearing, subscribe to our YouTube channel to watch videos from this program and other recent episodes.

Speaker3:
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. At my 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. 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.

Speaker3:
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 indexed 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. However, this has caused bond yields to fall to all time lows. As of May 24th, 2020, the ten year Treasury note was yielding 0.64%, and the 30 year Treasury bond was at 1.27%.

Speaker3:
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. There are two factors that contribute to company specific risk business risk.

Speaker3:
There are two types of risk, internal and external. Internal refers to operational efficiency and 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 were 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.

Speaker7:
Are you concerned about the Biden administration? How rising taxes could negatively impact your retirement? Then I encourage you to talk to Ford Stokes and his team at Active Wealth Management. Ford and his team of experienced financial advisors will help you understand the fees and risks involved with your current portfolio. Simply visit active wealth.com to book your free financial consultation and tell them Charlie Kirk sent you.

Producer:
Investment Advisory Services offered through Brookstone Capital Management, LLC BCM a registered investment advisor, not an actual client of active wealth management.

Speaker3:
And welcome back to the active wealth show Activators. I'm Ford Stokes, your chief financial advisor. I've got Sam Davis here with us, our executive producer. And you've heard you just recently heard my chapter in my book, Annuity 360 on bond replacement and how you can reduce fees. And one of the ways to do that is to just replace the bonds within your portfolio. So typical 60 over 40 portfolio, right? 60% stocks, 40% bonds. Harry Markowitz was given credit for being the founder of Modern Portfolio Theory where he stated you had 60% stocks and 40% bonds will help you find an efficient frontier that moves up and to the right. When you're looking at growth curves, you're growing over time. And that was called an efficient frontier last year. In 2022, the 60 over 40 portfolio had its worst year in 41 years, its worst year in 41 years. So I would just ask, how much longer are you going to keep doing it the way that your old advisor tells you to do it? Did you know you can reduce your advisory fees by 40% by investing the bonds in your portfolio into a fixed indexed annuity? Because there are no advisory fees in portfolio fees with a fixed indexed annuity. We can also put you in some very low cost, low fee fixed indexed annuity, some that are accumulation based. They don't really have any income rider fees and so we can help you there.

Speaker3:
You can also invest in ones that give you a bonus on your money of up between 10 and 20%. One product that's offered by nationwide. Yes, those nationwide is on your side, folks. They work through independent advisors like me and they've got an extremely attractive product that I would love to be able to introduce you to. There's only 3000 advisors in the country approximately, that have access to this product to sell it, that are appointed and licensed to sell this product. And we're one of those 3000 and we can help you. All you've got to do is reach out to us at (770) 685-1777 again (770) 685-1777. Or you can go ahead and visit active wealth.com and now what I want to do is give you a little bit of peace of mind and a feeling of lifeboat camaraderie a little bit. And we're going to play my chapter about the famous people who have invested in fixed indexed annuities. It might surprise you. Chapter three Famous people who invested a significant amount of their hard earned wealth in annuities. Big idea annuities are for everyone. Even if you're not worried about outliving your wealth, annuities are safer for your money than investing in stocks or bonds, or simply not investing at all. Babe Ruth, known as the Sultan of Swat, Babe Ruth came into his glory days during the Roaring 20s and his manager was worried that he was blowing through all of his money without putting any of it away.

Speaker3:
He introduced Babe to an insurance agent from the Equitable Insurance Company. Now AXA Equitable from 1923 to 1929, the slugger contributed more than half of his salary annually, purchasing between 35,000 and $50,000 worth of annuities each year. The Great Depression hit the country hard. In October of 1929, Babe Ruth was forced to retire from baseball in 1935 due to health reasons. He was unemployed during the worst time in history, but Babe Ruth had his income annuity. It's been reported that he received an income of $17,500 a year, which would translate into an annual salary of more than 290,000. In today's dollars, his famous quote still resonates. Today. He said, I may take risks in life, but I will never risk my money. I use annuities and I never have to worry about my money. Steve Young. Steve Young was signed out of Brigham Young University into a $40 million contract with the USFL. That was the headline. At least in reality. Young was given an annuity that would pay out something like $40 million over the 50 years that followed. Given the fact that some players were not paid for playing in the final season or other seasons of the USFL.

Speaker3:
It. Accepting the annuity appears to have been a genius move on the part of either young or his agent. The annuity payments have lasted longer than the league, and it's safe to say that he's made more money than probably anyone else involved with the league. To be fair, it couldn't have happened to a nicer guy. Even with a large signing bonus and salary, he continued to wear old jeans and drive a 19 year old Oldsmobile dynamic. In addition to outlasting the league, that annuity even outlasted the Oldsmobile car company with a staggering number of pro athletes going broke after they retire. It's refreshing to read stories about players who made smart financial choices. Shaquille O'Neal, one player who has used annuities to his advantage is retired star Shaquille O'Neal. Over his 19 year career, he generated $292 million in total compensation in retirement. He is projected to make as much as $1 billion from endorsements, even after his career is long over, thanks to a wise agent who made him put $1 million annually into annuities from his rookie year onward. Shaq lives off the income the annuity generates with his endorsement legacy for his children. Shaq scenario demonstrates how pro athletes and other prodigious earners can protect themselves against their own personal spending errors. Allen Iverson, NBA player Allen Iverson earned $200 million during his career, $155 million in salary and 40 to $50 million in endorsement deals.

Speaker3:
Iverson ended up going bankrupt because of his overly lavish lifestyle. In a December 2012 court filing, Iverson told the court that his monthly income was $62,500, but his expenses were 360,000. Luckily for Iverson, Reebok saved him from becoming destitute by paying him an annuity worth $2.3 million in 2001. Iverson made a very smart decision that would ultimately save him. He signed a unique endorsement deal with Reebok. Not only will Reebok pay Iverson $800,000 a year for life, they set aside a $32 million trust fund that he can begin accessing when he turns 55 years old in 2030. Since he divorced his wife in 2013, he will receive half of the trust. Another way that Iverson will be able to protect himself against future bankruptcy is his access to the NBA pension. He is eligible for another $8,000 a month. The lump sum of this pension is between 1.5 and $1.8 million. Most pensions are set up with single premium immediate annuities. Benjamin Franklin When Benjamin Franklin died, he requested that the 2000 sterling he earned as the governor of Pennsylvania from 1785 to 1788 be divided equally between Boston and Pennsylvania. He wanted the money to be dispersed as a legacy. 200 years later, in the spring of 1990, the balance in the Philadelphia account was valued at approximately $2 million, and the balance in the Boston Trust was about $4.5 million.

Speaker3:
This was sometimes called Franklin's IRA. The money in the Boston Trust was invested using a new take on an old idea the annuity. Using a tax deferred index variety. The money was able to benefit from exposure to stock market growth without stock market loss. This allowed the trustees of the Franklin Institute in Boston to turn an estimated $4,400 into 4.5 million, even while it was paying out an income for 200 years, Beethoven, the social luminaries of Vienna, wanted to keep Ludwig van Beethoven from leaving their country. And so in 1809, two Princes and an Archduke guaranteed the musician a generous annuity. All he had to do was stay in Vienna and compose and perform his music. His benefactors have supposedly been quoted as saying something along the lines of only a man free of worries can create with such genius. Interestingly enough, Vienna also saw its time of economic downturn, and one of the annuities guarantors tried to stop paying Beethoven, claiming financial hardship. Beethoven sued one and continued to receive his annuity payments. Perhaps this is what inspired the literary genius of Jane Austen, whose character Fanny observes in Sense and Sensibility. People always live forever when there is an annuity to be paid. An annuity is serious business. It comes over and over every year and there is no getting rid of it. It's the.

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

Speaker3:
On this week's show, we shared a quick market update with some good news. We're we're wages were slightly outpacing inflation and pricing and consumer prices out there. So that was really good news. We shared our financial wisdom quote of the week, which was the more I learned, the more I realized I don't know from Albert Einstein, who lived between 1879 and 1955, the genius himself. And then we also shared the interesting story about Aretha Franklin's will being hidden in her couch that now they've got the one that she wrote on her couch as being the will that's in force by a jury that just came out five years after her death. So let's make sure that we get a will notarized and witnessed properly and prepared by a licensed attorney and a state attorney also. Are you paying too much in fees? We we kind of we can help you find out. We can help you understand that elusive expense ratio so we know how much you're paying in fees. And also we can help you understand how much you're paying and advisory and portfolio fees. We also taught you this week in history where the first Model T Ford was sold in 1903 by the Ford Motor Company, and we've played a few chapters on bond replacement and play the chapter just now on famous people who've invested in fixed indexed annuities to kind of give you guys a little bit of lifeboat camaraderie and understand a little bit of peace of mind that other people have done that too.

Speaker3:
And you don't have to listen to any negative press that generally focus on variable annuities and also come from wirehouses. They're trying to make sure you don't take money out of the market. They want to make sure you stick their money with them so they can make more money. You need to make money work for you. I also personally have never seen a bond portfolio do better over time or model out financially better over time than a portfolio with fixed indexed annuities. I've never seen it. I'm always open to be able to see those if anybody wants to submit those afforded active welcome. I've always seen the fixed indexed annuity outpaces the bond portfolio because the fixed indexed annuity does not have the interest rate risk and the reinvestment risk that bonds have and also you get to eliminate the advisory and portfolio fees with the fixed indexed annuity. So we think that's a kind of a big deal. And remember, when you're seeking information about retirement, if you're going to be a bear, be a grizzly, try to seek as much information as possible. And next week, we're going to talk specifically about investing into a smart retirement plan. We're going to start our series again on Smart Retirement Plan. And we're going to start with smart Risk, Smart, safe and Smart tax next week. Be sure to come back next week and list the active wealth show right here on Am 920. The Answer.

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, Fort Stokes at (770) 685-1777 or visit active wealth.com Investment Advisory services offered through Brookstone Capital Management, LLC BCM a registered investment Advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot 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.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you’d love including collaboration tools, powerful integrations and APIs, world-class support, secure transcription and file storage, and easily transcribe your Zoom meetings. Try Sonix for free today.