Not Your Mom and Dad’s Retirement: Retirement Today versus Retirement of the Past : Audio automatically transcribed by Sonix

Not Your Mom and Dad’s Retirement: Retirement Today versus Retirement of the Past : this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
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Producer:
Welcome to the Active Wealth show with your host Ford Stokes for it is a fiduciary and licensed financial advisor who places your needs first. You’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. Investigate and now your host Ford Stokes

Ford Stokes:
And welcome to Active Wealth Show activators on Ford Stokes, the chief financial advisor, and I’m joined by Sam Davis, our executive producer. Sam, welcome to the weekend, please.

Producer:
Welcome to the weekend activators. So happy to have you here. It’s a little chilly in the Atlanta area, but not too chilly, and that’s how we like it for the holidays down here in the South.

Ford Stokes:
It’s pretty good and there in December, right? Stay warm. Enjoy your Christmas shopping, taking care of everybody. And we’ve got a really packed show today. So today we’re going to talk about a lot of different things. We’re going to start off with giving you a market update, then we’re going to give you a inflation demonstration. I think you’re going to find this interesting and educational. Then we’re also going to talk about the retirement of the past versus the retirement today, and I’m going to deliver on what I promised last week. We’re going to talk about what’s going on with Secure Act 2.0. And in Segment four, we’re going to go into detail about structured notes and the latest structured note that we’re offering in December from Citibank that is paying out nine point eight zero percent over the next 12 months. It cannot be called within six months. The first six months. They have to keep paying you out one twelfth of nine point eight zero percent. Your principle is protected as long as the S&P five hundred, the Russell 2000 and the Nasdaq 100 do not lose 30 percent of their value. As long as you’re above 70 percent of those from the time you purchased the structured note, your principal is one hundred percent protected. So that’ll be an interesting thing, but we’re going to talk more about structured notes here in segment four. So Sam, let’s hit him with the market update sounder. Let’s hear the bell.

Producer:
Your Active Wealth market update

Ford Stokes:
Gas prices, which Bennett startling high levels for much of the summer and fall are finally pulling back, and government forecasts predict they’ll fall as much as thirty eight cents per gallon by January. The U.S. Energy Information Administration on Tuesday said it expects the price per gallon to fall from three dollars and thirty nine cents in November, the highest price in over seven years and a dollar twenty nine cents per gallon more than the previous year to three dollars and one cent in January for twenty twenty two. It says gas prices should average two dollars and eighty eight cents per gallon, a notable decline from twenty twenty one prices. The price drop comes amid predictions that global oil production will pick up next year, with supply outstripping demand. That hasn’t been the case for the last 18 months, and the slow output caused a squeeze when people began to emerge after months of lockdown from COVID 19 jobless claims. The number of Americans filing for unemployment benefits last week tumbled to the lowest level in more than half a century. The latest sign the labor market is bouncing back from the coronavirus pandemic. Figures released Thursday by the Labor Department show that applications for the week ended December 4th dropped by one hundred and eighty four thousand from an upwardly revised two hundred and twenty seven thousand a week earlier, easily beating the two hundred and twenty thousand forecasts by Refinitiv analysts.

Ford Stokes:
It marked the lowest level for jobless claims since September 6th nineteen sixty nine, when it was one hundred and eighty two thousand. And now we’re going to share a little bit more about what kind of what’s going on in the U.S. markets as well, and we wanted to give you kind of what’s going on with the job markets and also what’s going on with gas prices. But as of Thursday, stocks notched a third day of gains and Apple hit its record high. U.S. stocks notched the third day of gains as investors continue to monitor the COVID 19 variant and its potential impact on the economy. The Dow Jones Industrial Average rose thirty four points, or 0.1 percent, while the S&P five hundred the Nasdaq Composite were higher by 0.3% and 0.6 Percent, respectively. This after the S&P 500 posted its best day since March on Tuesday. And the latest job openings, like we talked about and Labor Turnover Survey, or jolts, showed its jolts showed eleven point zero three million job openings, folks in October, the highest number of openings since July, when businesses were looking to fill eleven point one million positions. It marked an increase from September, when there were an upwardly revised ten point six million open jobs. Dow members Goldman Sachs and Salesforce led the decline among the 30 stocks, while Apple notched a fresh record.

Ford Stokes:
And Wal-Mart was up point three seven percent, Intel was down one point twenty five percent and Apple was up zero point to nine percent. In corporate news, shares of Pfizer rose after the company, along with its partner BioNTech, said a third dose of their vaccine can ward off against the variant. Surprise. Surprise that they would come out with that, by the way. Pfizer Inc was up one point seventy nine percent and BioNTech SE was down a negative point to five percent. And also oil also ticked higher to the seventy two dollars per barrel level. In Asia, Tokyo’s Nikkei 225 index gained one point four percent. Hong Kong’s Hang Seng added 0.1 percent and and China’s Shanghai Composite Index climbed one point two percent. Japan downgraded its growth estimate for the last quarter to minus three point six. From an earlier reported contraction of three point zero percent, the change reflected weaker consumer and public demand and trade and lower levels of private inventories. Japan’s parliament is expected to approve a proposed record stimulus package of fifty six trillion yen, or four hundred and ninety billion dollars, including cash handouts, to aid ailing businesses to help the economy out of the doldrums worsened by the coronavirus pandemic. And that’s your market update. So let’s also kind of get into this inflation demonstration, if we can.

Producer:
It’s time for an Active Wealth inflation demonstration.

Ford Stokes:
The U.S. is poised to enter year three of the pandemic with both booming economy and a still mutating virus. But for Washington and Wall Street, one COVID aftershock inflation is starting to eclipse almost everything else. Higher prices helped deliver a banner year for U.S. business, which is posting its fattest profit margin since nineteen fifty. But for Joe Biden’s administration and the Federal Reserve, who didn’t see it coming, the sudden return of inflation, largely dormant for decades, is looking increasingly traumatic. It’s likely to drive some big changes in the coming year as the Fed pivots towards raising interest rates and the president heads into midterm elections with slumping approval ratings. The pandemic made it harder for the world to produce goods and move them around. The government shored up incomes in the crisis like never before. So households remain eager to spend, and a combination of lockdowns and COVID caution meant their purchasing power, which focused on consumer goods instead of services. That’s why there are long lines of cargo ships stretching off the coast of Los Angeles waiting to dock while used car dealers keep hiking prices and a global commodities rally leaves Americans paying more at grocery stores and gas pumps. You know, what does this all mean to you? It means you need to stay invested. It means you need to inspect what you expect about your portfolio. It means you need to also watch about downside risk. You need to consider what you’re investing in bonds as an example, especially if we’re in a slightly rising interest rate environment.

Ford Stokes:
That means if interest rates go up, the bonds that you currently hold are going to be worth less in the marketplace and you’re going to lose market value. You know, you may still get paid out the money that those bonds say they’re going to get paid out, that they’re going to pay you, but you’re going to lose market value on those bonds should you decide to sell those bonds and move into something else. Also, with bonds, you have reinvestment risk, you have interest rate risk and you have all kinds of systematic and unsystematic risk. Also, the go forward price to earnings ratio on U.S. corporate bonds right now is one hundred and fifty times. It’s a go forward p e ratio of one 50 plus, whereas the go for PE ratio on U.S. equities is right around between twenty two and twenty three. And I would ask you, you know, do you really want to risk just to get income or you want to risk five, six times, even seven times? The amount that you’re risking was with U.S. equities, and I would say, no, that’s that’s not a good, fair exchange between risk and reward, and I wouldn’t consider if I were you, I would try to consider implementing a bond replacement. And if you’ve got questions about bond replacement, whether it’s with structured notes or whether it’s with, we’re going to talk about here in segment four or whether it’s with fixed index annuities, then I would encourage you to visit bond replacement.

Ford Stokes:
That’s bond replacement to try to do a better job at generating income and also getting market like gains. Here we’re going to do for the rest of the show. We’re going to talk about your retirement of the past versus where it is today and all the all the headwinds you’re facing. We’re also going to talk about Secure Act 2.0, and we’re going to talk more about structured notes in detail in Segment four and also going to talk more about the structured note that’s offered by Citibank for December through Brookstone, our registered investment advisory firm that’s got over $8 billion in assets under management. We’re going to talk that it’s offering nine point eight zero percent and we have a different structure note every month. We also like doing structured note ladders where we implement five ladders in a row, five different structured notes in five consecutive months, and we’re going to talk about what that does for you and how that diversifies your risk. You’re listening Active Wealth Show right here on a.m. nine 20. The answer and we come back, we’re going to talk about retirement of the past versus retirement today and more about Secure Act 2.0 and also structured notes as a great bond replacement and investment opportunity. Thanks so much for being with us. Coming right back to learn all you need to know about retirement of the past versus retirement today. Secure Act 2.0 and structured notes.

Producer:
Late December,

Back in 63. Very special time for

Producer:
Me, as I reveal. Listen to the number one show on the weekends on AM nine 20, the answer to protect and grow your hard earned money, the Active Wealth Show with Ford Stokes, your chief financial adviser, Saturdays at 12 noon and Sundays at 11 a.m.

Ford Stokes:
Welcome back activators, the Active Wealth Show Ford Stokes, your chief financial adviser, got our executive producer Sam Davis with us. And Sam, let’s head home with this week in history.

Producer:
This week in history.

Ford Stokes:
And this week in history, on December 12th, 1915, Frank Sinatra was born. Old blue eyes. And he’s considered one of the greatest vocalists of the 20th century, sold an estimated one hundred and fifty million records worldwide. And his music is still widely played and enjoyed today. In fact, Sam, my wife and I are the song we dance to at our wedding was the best is yet to come.

Ford Stokes:
And also, my uncle was so nice and kind. Over 20 years like that 20 years ago, he gave us. He let me drive his BMW m roadster. That was what they call evergreen, but it’s very turquoise looking. And my grandmother loved turquoise so much that she had a turquoise Weber grill and a turquoise smoker, and she was originally from Iowa. I know you’re from Kansas and she was awesome, and she and my grandfather went to Iowa State Cyclones. But anyway, we were driving my uncles, my mom’s side. We were driving my uncle’s BMW Rocher down to Savannah, and we had a two-cd set of all of Frank Sinatra’s greatest hits. And that’s all we played the entire weekend, and we were very young back then and and but we just love Frank Sinatra. So happy 106th birthday old blue eyes.

Producer:
Yeah, I mean, if those are the two albums you got, that’s really all you need. I mean, I’ve been hearing Frank Sinatra my whole life because my mom is such a big fan with her being from New York and you and I, we were jamming out to some Frank Sinatra in the office this morning. Timeless music and good for the holidays, too.

Ford Stokes:
Yeah, it’s great stuff. So we’re going to play Frank Sinatra songs coming in and out of breaks the rest of the show. Hope everybody enjoys. But again, happy birthday. Happy 106th birthday to Frank Sinatra. All right, now let’s get into what I was talking about. Let’s let’s talk about first what’s going on with the Secure Act 2.0. And it hasn’t become law yet, but in May of twenty twenty one, it unanimously passed the House Ways and Means Committee. One hundred and forty six page act raises the RMD age the required minimum distribution age from 70 to which was set in place by a secure act one point zero and twenty nineteen to age seventy five. But again, that doesn’t affect most of you because most people still need to take money out of their IRA anyway to live on and enjoy their retirement. Also again, folks, I want to make sure you understand retirement is more about income than it is about getting one big nest egg, and you want to have tax efficient buckets of investment, so you want to have maybe some money in your tax deferred accounts like your IRA, your four or three b you’re four for one K, you’re four fifty seven, your separate things like that, but you also want to have money into tax free buckets like a Roth IRA or life insurance. And if you want to understand how you can really generate tax free income during retirement, I would encourage you to visit ActiveWealth.com, click that set an appointment button the upper right corner and you’ll get placed directly into my calendar.

Ford Stokes:
Also, you can just call our office at (770) 685-1777 again (770) 685-1777 And you can also just send me an email at Ford Stokes at ActiveWealth.com. And believe it or not, I get emails every week, so we’d love to have you do that. And then also the Securing a Strong Retirement Act of twenty twenty one, which may not make it but in 2021, but it probably will get passed at some point. The Secure Act 2.0 also expands enrollment enhances four or three B plans because a lot of a lot of our teachers and nurses and other people like that they they’ve only had access to like pension type money they haven’t had access to for one K type investments. And so the bill passes folks that are over 50 years old will be forced to invest in on a Roth basis. This is an effort to raise government revenues. This is called a Roth IRA by Forbes.com and by Kiplinger. Potential for regular IRA contributions become Roth only. Congress wants their tax dollars now. Sep, IRA and Simple IRA contributions would then be made on a Roth basis. Right now, they are made on a an IRA basis, so it’s tax deferred and also reduces your current year income.

Ford Stokes:
They wouldn’t do that. They would just take your money now, take their taxes now. But the good news is then you would kick the IRS out of being your partner in retirement on those dollars. Also, with a Roth, I want to remind everybody the five year rule still applies. Five years, you’ve got to wait five years from the time you open up your Roth, or five years from the time you implement a Roth Ladder Conversion from your IRA to your Roth IRA. Once you wait the five years. Guess what? The principal and the gains are completely tax free. There are no RMDs involved and you can take money out. No problem. And so the Secure Act 2.0 bill helps four or three be participants. Like we said, enjoy the same investment options as folks do with their four one KS now that are really more in the business sector versus teaching and caring for us in health care. And now let’s talk about retirement in the past. So in the past, you used to work for one company your entire career, like in the sixties and seventies. You know, you retire at age 62, you’d receive a pension equal to about 80. Percent of your annual compensation. You’d start Social Security at age sixty two to make up the missing 20 percent the pension didn’t cover and 100 percent of your paycheck would be replaced and you’d still be charged.

Ford Stokes:
I mean, you’d still be taxed at your ordinary income tax rate, but you’d have guaranteed source of income. Very few had personal investments, such as IRAs and four one KS. Very few individuals had money in the stock market. Most money in the stock market was managed by pension funds, and very little financial planning was done or even needed. And there’s no real vision of life during the golden years. And listen, when you’re as, you’re driving around on it. Now, before I talk about what’s going on in retirement in the twenty first century, I don’t want you to close your eyes because you’re driving, but I want you to think about your retirement. I want you to think about who are you with? What are you doing? What is your purpose during your time? What are your goals during retirement? And lastly, how are you going to fund it? So like for my wife and me, we’re going to be with each other and we’re going to be close to our kids and grandkids, and we’re going to try to be the benefactors. Like a couple of times a year for family vacations, because in our family, we spell, love Timmy. We try to spend a lot of time with each other and we’re there. We never miss any of our girls cheerleading competitions where we’re picking them up and and dropping them off as they still don’t drive.

Ford Stokes:
They’re 15 years old. We got twin girls who were 15 years old and we pick them up and and drop them off from all their all their cheer competition, school and all that stuff. We don’t just put them on the bus. We really try to spend time with them. Now, granted, we’re dealing with 15 year old twin girls and, you know, they’re buried in their phones and occasionally they’ll talk to us. It’s all exciting, but I would encourage you to try to figure out ways to spend more time with your family, because that’s truly how you’re going to show that you love them. And I know you hear my voice and you understand what I’m saying is absolutely true. So spend more time with your family during retirement and make sure you’ve got enough money to be able to do that. And usually that happens when we’re the benefactors, whether we’ve got the Lake House where everybody can come to or we’ve got the Beach House. And I’ll give you a hint here. You don’t have to stay in your bucket house. You’re Dunwoody or Sandy Springs house or your Stockbridge house or or your Alpharetta or coming house. You can actually sell that house and move to the lake or move to the beach or go get on Lake Lanier or whatever you want to do or go down to the Panhandle, or go down to St. Simons or see Island or go down to Rosemary Beach or somewhere like that.

Ford Stokes:
And guess what? The kids are going to come visit? So it’s a really good idea and you’ve got the same amount of money in your house, so hopefully you can make a lateral move or even downsize. All right. So now let’s talk about retirement in the twenty first century. And thanks for allowing me to overstep my bounds as a financial advisor, as your chief financial adviser to really get you to think about, you know, what you’re doing in retirement, what’s your vision for retirement, what you’re doing and who you’re with and how you’re going to fund it? So here’s the retirement in the twenty first century, you work for multiple companies throughout your working years. Pensions are becoming a thing of the past. Only 13 percent of all S&P 500 companies now, according to Forbes, are actually offering a pension. The four one K is the primary savings. Vehicle markets are more volatile than ever. We’re living longer. There’s longevity risk. The CDC came out with a study that said that if a married couple, both spouses within a married couple, lived to be over sixty five years old. If they make it to their sixty fifth birthday, there’s a majority chance that they’re at least one of them is going to be to be over 90. Which guess what? Guys have got a secret for you. The women live longer, so it’s going to be the wife and we all want to take care of our spouse.

Ford Stokes:
Also, health care costs are on the rise and you’re responsible for funding your own retirement. And you know a lot of what you’re driving around. You probably thinking about, Hey, wait, a second, what changed? Who moved our cheese? Well, really, the four one K effect is what moved your cheese. And also it generated huge gains and growth in the market, and we come back from the break. We’re going to talk about that. We’re going to talk about the history behind that and also how we reverted back to the mean from the year 2000 to today. But we had unprecedented growth between 1990 nineteen eighty to two thousand with the Baby Boomers and what that means to you and how RMDs could be a headwind in your retirement planning. We’re so glad you’re with us. We’re talking about retirement of the past versus retirement today. Also, how RMDs could be putting downward pressure on the market. We’re talking about seven financial headwinds you’re dealing with during retirement. And in our last segment, we’re going to talk about structured notes and how those could be a great bond alternative to get you much higher gains and much higher annual interest on your bond money. And we think that’s a really good idea. So come right back. You’re listening to Active Wealth Show right here on AM nine in the answer.

Producer:
Are you concerned about U.S. tax rates being raised by the Biden administration and how that will affect your retirement? Tune in to the Active Wealth Show with Ford Stokes, your chief financial adviser, to learn how you can reduce the taxes you pay before and during retirement. The Active Wealth Show Saturdays at noon and Sundays at 11:00 a.m..

Ford Stokes:
And welcome back activators, I’m Ford Stokes for chief financial adviser, and I’m joined by Sam Davis, our executive producer. So if you’re wondering who an activator is, it’s somebody who listens to this show. Somebody who wants a successful retirement. Somebody who wants to protect and grow their wealth. And they want a good exchange between risk and return. They also want to grow some of their money without any risk, and they feel like they deserve that. And I think they do, too. They don’t want to put money in just a bank CD, and we’ll talk about a really good bank CD alternative in segment four, and they want to be able to build a tax efficient fee, efficient and market efficient portfolio. And they don’t have to watch the stock ticker every day. So we’re talking about retirement of the past versus retirement today. Well, also recapping the seven financial headwinds that you’re facing in retirement. So let me give you these seven and we’ll get straight back into retirement today because we’ve already kind of gone over what retirement of the past was. So you got seven financial headwinds. Number one is the COVID 19 pandemic. Anybody dealing with that, whether you’ve got to put masks on and also the market downturn that happened in March of 2020. Number two is rising inflation. That’s kind of going with the COVID 19 pandemic. And a lot of that’s because our government gave out a whole lot of stimulus money and a lot of people would rather not work.

Ford Stokes:
And we’ve got over, as we talked about in the market update, we’ve got over 11 million open jobs out there. The number three, there’s RMDs creating downward pressure on U.S. markets over the next 20 to 30 years. And I want to dove into this, I want to make sure that you understand. Kind of what’s happened? And that bulge of baby boomers, I think now it’s over 20000 Baby Boomers are turning 65 every day. Now it’s crazy. But from 1980 to 1999. And this, according to the Dow Jones Industrial Average, the source for this is Yahoo Finance. And Fed prime rate. From 1980 and 1999. The Dow Jones Industrial Average increased twelve hundred and seventy percent. The next closest growth was from 1940 to 1959. That was 348 percent. So we did three acts of that number. All because. In 1978, they came out with. The, you know, the four one K. And here’s the foreign K effect prior to nineteen eighty. Ninety two percent of retirement savings plan contributions were to company managed pension plans. Congress passed the Revenue Act of nineteen seventy eight. Section 401K was added to the Internal Revenue Code for one K gave employees tax free way to defer compensation from bonuses or stock options. In nineteen eighty one, the IRS allowed employees to contribute to four one K plans through salary deductions. So every two weeks, the Baby Boomers were putting money in and we went up to twelve hundred and seventy percent.

Ford Stokes:
Well, we’ve kind of reverted back to the mean. From twenty to twenty eighteen, we were at one hundred and thirteen percent. A lot of people felt like, Hey, we were going to be at twelve hundred and seventy percent growth over twenty years forever, but it ended up reverting back to the mean because we didn’t have that same bulge of folks, those baby boomers. Well, here’s the problem. The problem is that those baby boomers are now having to take money out of their portfolios and do forced sell offs. And you’re not able to just pay your taxes on the RMDs. You actually have to take the RMDs, distribute them, put them in your investment account because they want those out of the tax deferred accounts, because U.S. government wants to make money on your gains as well, and they want to get their ordinary income tax rate when you when the when you distribute it and if you don’t reinvest that money. They’re going to be fewer sellers and more buyers. And so that could place downward pressure on the markets. And I just want to be clear about that, that all these baby boomers that have to distribute money because of their RMDs and it goes up every year. I mean, it starts out at four point one four percent. At age 70 to. But by the time you’re 90, it’s eight point seventy seven percent of your asset of your four one K or your IRA, your fourth or at four three B or four fifty seven.

Ford Stokes:
But generally it’s your IRA by the time you’re 90 because you’ve rolled everything over into an IRA by then, you’re looking at having to take out eight point seventy seven percent and we’ve got a four percent rule, right? We only want to withdraw four percent of our assets each year. So if we take out eight point seventy seven percent, what we have to do is we have to distribute it and then hopefully reinvest it into an investment account that doesn’t grow as tax efficiently because it’s not growing. Tax deferred. And then we have a cost basis, then we have to pay. When we distribute out of that, we have to. Pay the taxes on the capital gains, hopefully we’re doing that. Longer than a year period, so we don’t have we have long term capital gains, not short term capital gains and short term capital gains would be at our ordinary income tax rate and long term capital gains would be like 15 or 20 percent. So number three in the seven financial headwinds is R&D is creating downward pressure on U.S. markets over the next 20 to 30 years, I promise you, that is a headwind that is facing you in retirement. Number four is twenty eight point ninety six trillion dollars in U.S. debt, according to U.S. debt clock. Okay. Do you think taxes are going to go up in the future or do you think they’re going to go down? Well, I think we’re going to have to go up because we’ve got to be able to pay the debts that we’ve incurred.

Ford Stokes:
Number five is low CD and money market rates, we’re going to talk about CD and money market rates in segment four, but. We looked it up on Bankrate.com and Capital One Bank is offering a zero seven zero percent bank CD. If you walk into, you know, a bricks and mortar bank, whether it’s Truist or was, which was SunTrust and or Bank of America or Wells Fargo, you’re probably looking at zero point zero five percent on a one year bank CD. Number six, the number six financial headwind you’re dealing with in retirement is rising taxes and financial services fees. If we’ve got rising taxes and also believe it or not, from 2008, you would have thought that they would have given us a break on the financial services fees because they everybody in Wall Street, they were to blame. They did all these derivatives on the mortgage business. And when the mortgage crisis happened, it was their fault. You would have thought that they would have said, Hey, we’re going to give you a break. We made a mistake. We’re going to try to bring more people back into investing. We’re going to we’re going to reduce our rates. No, they didn’t. And in fact, they went up in administrative rates for four one ks and for three TVs. They they figured out all different ways to take money away from you. Things like an expense ratio within mutual funds.

Ford Stokes:
Things that don’t show up in your statement on a monthly basis, but are in there not necessarily hidden because they’re they’re detailed in the prospectuses on each mutual fund. But let me ask you, when was the last time you read a full prospectus of the mutual fund? Probably never. And so I would encourage you to really watch the expense ratio within your portfolio. And if you’re curious about your expense ratio, then I want to encourage you to reach out to us at Active Wealth. That’s Active Wealth.com, and we’re happy to help you. And number seven would be a potential bond bubble with a go forward price to earnings ratio on U.S. corporate bonds at over one hundred and fifty versus twenty two or twenty three p e ratio on U.S. equities. I would ask you, Do you think bonds are risky? Absolutely. You’ve got to be careful that they will repay you back your your principal. You also got to be careful and make sure that they can refinance the debt when they roll it over to the next bond so they can pay you back your principal. And you really need to be invested in investment grade bonds, a Triple B plus and higher. But the ones that are below Triple B are the ones that are paying the rates, and so I would encourage you to know what bonds you’re holding. If you’re going to invest in bonds, but for me, you know, Harry Markowitz is the one who got credit in 1952, which next year he got credit for modern portfolio theory.

Ford Stokes:
Next year it’s going to be 70 years of modern portfolio theory. Of the 60 40 portfolio, 60 percent stocks, 40 percent bonds. But what happens when the safe leg of the stool that is, your portfolio is no longer safe? Well, in my opinion, you need to do something bold and you need to do a bond replacement, whether it’s with fixed index annuities to get market like gains. And we have some fixed index annuities that are offering that are illustrating at nine point eighty four percent. We also have a structured note that we’re going to talk about next segment I’ll read by Citibank that’s offering nine point eight zero percent on a 12 month note. It can only be, and it can’t be called in the first six months. And you can roll it over to another node if it does get cold in month seven. I would get higher interest rates and growth rates off of your bond money and get rid of the bonds, if I were you. That’s that’s my recommendation. So those are kind of all the factors you’re dealing with in today’s retirement, whether it’s low interest rates or, you know, you’ve got a lot of baby boomers selling off to accommodate their RMDs, which is required by law. Also, if the U.S. debt is at an all time high and you know, you’re not able to generate the same kind of.

Ford Stokes:
Of interest. You know, off of the money you have that you could have, like in nineteen eighty four, you could have generated one hundred and fifty thousand dollars of income off of a million dollars today. That’s like twenty six grand. If you’re just putting it out there into safer products. I would encourage you to consider replacing your bonds and doing something bold with your retirement dollars, and the best way to do that is to have a fiduciary that like me who has to put your needs ahead of our own and ahead of our business and make sure that we’re doing the right thing by you to plan for the future. We want to make sure that this money lasts, want to make sure this money grows. We want to make sure this money out lives you versus you outliving your money. We come back from the break, we’re going to give you our beating bank CD segment, but we’re also going to talk about. Structured notes in detail and how you can generate a higher rate of return because this is kind of what private wealth management looks like. And again, if you’re interested in working with us, I would encourage you to visit Active Wealth.com and we’re happy to book a free financial consultation with you. It’s a $1500 value. We look forward to helping you protect and grow your hard earned and hard save well. That’s life. That’s what all the people say.

Ford Stokes:
And welcome back activators, the Active Wealth Show on Ford Stokes, the chief financial adviser, Sam Davis on the board of me, our executive producer, and we’re talking about how to beat bank CDs. We’re also talking about structured notes, so hit them with a sounder on beating bank CD.

Producer:
Sam need a higher rate of return from your safe money. Listen up, it’s time to beat the bank CD rates.

Ford Stokes:
So right now with one year bank, CD is the best one year bank. Cd rate, according to Bankrate.com, is offered by Capital One Bank at zero point seven zero percent, so it’s less than one percent. That’s not going to keep pace with inflation, especially considering that Social Security Administration gave all of its recipients of Social Security income benefits of five point nine percent, cost of living adjustment with everything that’s going on with inflation, and we talked about the top of the show. You really it’s a melting ice cube situation. If you’re investing in bank CDs, one of the great ways to replace bank CDs and beat those out is to invest in a fixed index annuity. We’ve got even a five year fixed indexed annuity that is paying out a significant portion. It’s illustrating at that even between nine point eighty four and 12 percent. And then so if you’ve got questions about that and you want to understand how you can get market gains without market like risk, I would encourage you to give our office a call. At (770) 685-1777 again (770) 685-1777 and then the other alternative for bond replacement alternative and also beating bank CDs out by a long shot or structured notes, structured notes or a large part of today’s financial market landscape. Globally, investment’s allocated to structured notes are an estimated to be in excess of two trillion dollars.

Ford Stokes:
Even those structured notes have been issued in the United States since the mid-1990s, the availability of information for financial advisors and also for their clients as a relatively scarce. With equity markets near all time highs and interest rates near historic lows, there’s been a growing interest in the use of structured notes in the portfolio construction process. Considering the size of this market and limited available information, it strikes us as an opportunity for our clients to gain a competitive advantage in the market and also to help grow their money at disproportional rates than what they can get elsewhere. A structured note is a financial instrument generally issued by a large, well-known financial institution like Citibank or Goldman Sachs or JPMorgan, Morgan or Merrill Lynch or Morgan Stanley or Bank of Montreal and others. Those are the ones we deal with. The terms vary both in time to maturity and market exposure. Each month, banks bring out a list of their calendar offerings. It is important to point out that issuers split their calendar terms between brokerage offerings, where brokers are paid, an upfront commission and advisory offerings. And that’s what we get. We get advisory offerings because advisor offerings are for fee based or fiduciary advisors like me. The issuers can strip out the commissions and provide more competitive terms for the end investor, so that benefits you. Those of you are driving around and listen to us on a.m. nine to one of the answers. Listen to the Active Wealth Show regularly and encourage you to go ahead and take advantage of this and reach out to us at ActiveWealth.com or give us a call.

Ford Stokes:
With monthly calendar runs, multiple bank issuers and changing market conditions, structured note issuance is very large and diverse and we like to offer an American style structure, but also offer American structured notes that have a 30 percent principal protection called a buffer so that you’re as long as the S&P 500, the Nasdaq 100 and the Russell 2000 on our notes. As long as they don’t lose 30 percent of their value, then your note and your notes principal is protected and they’re going to continue to pay out one twelfth of what the interest rate the prescribed interest rate is going to be. And we’re offering one in, like we said in December from Citibank, it’s offering nine point eight zero percent and it’s got a 30 percent buffer. And again, as long as the Nasdaq 100, the S&P 500 and the Russell 2000 don’t lose 30 percent of the market value, then guess what? Your principles are protected and you’re going to keep getting one twelfth of nine point eight zero percent every month. And also, these notes cannot be called in the first six months. Also, the mix on. If you’re curious, the mix on structured notes is Asia Pacific has fifty one percent of the structured notes out there, the United States, that’s 15 percent. Europe has twenty five percent and the rest of the world has nine percent.

Ford Stokes:
I would encourage you to take advantage with the rest of the world is doing. And let’s get going with structured notes to give you a greater rate of return structure and it’s basically a bond. What’s a derivative on a selected asset and that equals a structured note. The only time in your lifetime that the structure note is hit below 30 percent is during the mortgage crisis in 2008. And so if you have confidence that the market’s not going to lose 30 percent of its value, then it is a good idea for you to consider replacing your bonds with structured notes, or at least in part. We recommend people take like 10 to 20 percent of their overall portfolio and invest it in the structured note with us, because also you’re going to get a higher rate of return because we’re not getting a commission on the product. We’re only offering as an allocation sleeve within the overall portfolio that we manage on your behalf. And we would encourage you to pick the phone up and give us a call at (770) 685-1777 or visit ActiveWealth.com. Also, if you want to get my free book Annuity 360 that talks about annuities, which is another great bond replacement idea, then I would encourage you to visit Annuity360.Net and now the final countdown. It’s the final

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

Ford Stokes:
So in today’s show, we gave you a market update. We gave you an inflation demonstration. We talked about what’s going on with gas prices. We kind of gave you what’s going on with inflation as well. We also talked to you about Secure Act 2.0, the seven financial headwinds you’re facing in retirement. We also talked about retirement of the past, which retirement today, and we gave you a detailed account on what’s going on with structured notes and what are structured note is and how you could get nine point eight zero percent from our offered structured note in December from Citibank. That’s paying nine point eight zero percent over the next 12 months. Again, that is a security. It is at risk in the marketplace. But as long as the S&P 500, the Russell 2000 and the Nasdaq 100 don’t lose 30 percent of their value. Congratulations, your principal will be protected and you’ll get paid one twelfth of nine point eight zero percent each month. And those notes can’t be called in the first six months. We hope you enjoyed this week’s Active Wealth Show. We hope you learned a lot on this week’s Active Wealth Show, and if you did go ahead and reach out to us.

Ford Stokes:
Go ahead and give us a call at (770) 685-1777. Also, we encourage you to visit Bonde replacement to learn about. Learn more about what we can do to replace the bonds in your portfolio and get you a higher rate of interest that you market. Like gains without market risk with fixed index annuities or get you market like gains and market like an interest with some risk with structured notes as well. We also always provide our tactically managed portfolios that are performed very well in the market. We try to help you with downside risk protection, retirement income planning and Social Security maximization as well. Again, feel free to reach out to us at ActiveWealth.com and click that set an appointment button the upper right corner and you’ll meet directly with me. You won’t meet with any other advisors. We’ve got other advisors here at Active Wealth, but you’ll meet with me, so we’re here to take care of you, our loyal activators and our Active Wealth Show listeners. Hope everybody has a great week. Hope you’re enjoying this holiday season. And again, happy 106th birthday to old blue eyes Frank Sinatra. 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. 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 BCMA or 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:
A purchaser should evaluate and understand all of the risks and costs of an investment in structured notes Essenes prior to making any investment decision a purchase of an S.N. entails other risks not associated with an investment in conventional bank deposits. A purchaser may not have a right to withdraw his or her investment prior to maturity or could incur substantial penalties for an early withdrawal if permitted. A purchaser should carefully read the disclosure statement and any other disclosure statements for a S.N. before investing. An investment, in essence, is not FDIC insured and is subject to credit risk. The actual or perceived credit worthiness of the no issuer may affect the market value of SSNs. Essence will not be listed on any securities exchange. Even if there is a secondary market, it may not provide enough liquidity to allow purchasers to trade or sell. Essenes as a holder of Essenes purchasers, will not have voting rights or rights to receive cash, dividends or other distributions or other rights in the underlying assets or components of the underlying assets. Certain built in costs are likely to adversely affect the value of Essenes prior to maturity. The price, if any, at which the notes can be purchased in secondary market transactions, if at all, will likely be lower than the original issue. Price in any sale prior to the maturity date could result in a substantial loss. Essenes are not designed to be short term trading instruments. Purchasers should be willing to hold any notes to maturity. The tax consequences of Essenes may be uncertain. Purchasers should consult their tax advisor regarding the U.S. federal income tax consequences of an investment. In essence, if a person is callable at the option of the issuer, in the essence is called, the holder will receive only the applicable redemption amount and will not receive any coupon payments that would have been payable for the remainder of the term.

Producer:
Of the as ins are not, FDIC insured may lose principal value and are not bank guaranteed. This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. All data believed to be reliable but not guaranteed or responsible for reliance on this data. Past performance is not indicative of future results, which may vary the value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed and a loss of principal may occur. Brookstone does not provide accounting, tax or legal advice. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively. And investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Historical performance results for market indices generally do not reflect the deduction of transaction and or custodial charges or the deduction of an investment management fee. The occurrence of which would have the effect of decreasing historical performance results, economic factors, market conditions and investment strategies will affect the performance of any portfolio, and there are no assurances that it will match or outperform any particular benchmark. The investment strategy and types of securities held by the comparison indices may be substantially different from the investment strategy and the types of securities held by the strategy, not FDIC. Insured may lose principal value. No bank guarantee.

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