AWS Full Show 8.18.mp3: Audio automatically transcribed by Sonix

AWS Full Show 8.18.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Sam Davis:
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 Act of 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 arc of wealth show has grown because activators like you want to activate their retirement planning with sound tax efficient investing. And now your host Ford Stokes.

Ford Stokes:
And welcome to the active wealth show Activators. Ford Stokes, your chief financial advisor. And I’m joined by Sam Davis, our esteemed executive producer. Sam, say hi to the folks.

Sam Davis:
Welcome to the Weekend Activators. I hope everybody is enjoying this weekend, one of the final weekends of summer. I think kids are going back to school. You know, the temperatures are starting to cool off a little bit. Feels good outside. So have a good one.

Ford Stokes:
Yeah, you can tell that Sam doesn’t have kids because my kids have been back to school since August 4th. August 3rd? No, it’s good stuff. People are driving around the cars right now, Sam, laughing at you because they’re like, Yeah, thank God we got our kids back to school because them being home, it’s just it was hell on earth for us to be able to plan our world when we have to take them everywhere and keep up with their social life. At least that’s us with twin 15 year old girls. Like do that. But it’s always great to have a weekend ambassador. It always is. And Sam, thanks so much for being our executive producer. So we’ve got the next installment this week on the Smart Retirement Plan, and we’re going to talk about three new ones. But let me recap what we talked about last week. So we talked last week about smart vision. So having a vision for your retirement, what are you doing? Who are you with and how are you going to fund it? So that was smart. Vision was the first element of a smart retirement plan, and then smart inspection was inspecting what you expect and actually doing a portfolio analysis. And all you’ve got to do to get a portfolio analysis done is just go to active well and click that schedule a consultation button in the upper right corner that’s active wealth.

Ford Stokes:
And then number three was smart planning where you get a financial plan, your 95th birthday, that includes a portfolio analysis that also includes a Social Security maximization report. It includes a retirement income gap plan. It includes a portfolio and basically a financial plan to your 95th birthday with your current asset allocation, your current portfolio, that has nothing to do with us. And then number five is you get a financial plan to your 95th birthday with our recommended portfolios. That also includes a Roth ladder conversion plan to try to divest the IRS out of being your partner in retirement. If you want to get all five of those things, it’s basically $1,500 value. And we’ll do all five of those things for you. Absolutely. For free, at no cost to you. No obligation, because you listen to the show and you’re trying to get better educated and you’re trying to learn how you can invest and and retire successfully and build a tax efficient, fee efficient and market efficient portfolio. But those are the three things we talked about last week smart vision, smart inspection and smart planning. This week, we’re going to talk about three new categories and we’re going to talk about smart, safe, smart risk and smart tax. Those are going to be the three items, the elements of a of building a smart retirement plan that we’re going to talk about on today’s show.

Ford Stokes:
We do want to welcome all of our activators out there. And also, if you’re wondering who an activator is, it’s somebody who listens to the active wealth show. It’s somebody who’s trying to build that tax efficient, fee efficient and market efficient portfolio. It’s also somebody who’s looking for sound advice and they’re going to take some risk off the table. And we’re going to talk a lot about how to take risk off the table today with these three elements with smart, safe, smart risk and smart tax investment solutions, it’s really probably the most important show of our Smart Retirement Plan series. We’re going to have five of these shows. We’ve done one so far, and this one’s the second one, and this is probably the most important. Also, we want to make sure that if you’re looking to build a smart retirement plan, we want to again let you know you can get it done. Absolutely no cost to you. All you’ve got to do is pick the phone up and give us a call at 7706851777. Again, 7706851777. We look forward to talking to you. Deborah and her team are ready to stand by to take your call. And Sam, can you also tell them how they can subscribe and check out our podcast anytime?

Sam Davis:
Yes, I would love to. So the Active Wealth Show is available on the weekends on AM 920. The answer, but we know people are sometimes busy, sometimes can’t listen to.

Ford Stokes:
The show live.

Sam Davis:
But that’s okay because the active wealth show can be found online. You can go to Active Wealth Show, you can also listen to the show wherever podcasts are found. So if you have an iPhone, you’ve got Apple Podcasts on there. You can find the active wealth show. If you have an Android phone, you can go to Google Podcasts and we’re also available on Spotify, iHeart, Stitcher. Anywhere podcasts are found. So just check out the active wealth show and we’ve got a lot of episodes I think coming up on 140 episodes or so now. So go and check them out.

Ford Stokes:
Yeah, it’s good stuff. And Sam, thanks for being with us. You know, every step of the way. We sincerely appreciate you. Let me also talk about what you get again with the full retirement plan consultation, but mainly what you’re going to understand. You’re going to understand the current fees you’re paying, the current risks you’re taking, the allocation of your portfolio, but also the correlation of your assets. Like if one asset goes up, how much is the other, how much are the other assets going to go up or down with it? And we’re going to help you also figure out how to roll over your four on K or, you know, and also make sure there’s no tax event into your IRA. We’re going to help you figure out what’s going on with any Roth IRAs and how to get started with Roth IRA planning and Roth IRA conversion. If you’ve never done one or you don’t understand how to do that, that’s another reason to visit Active Wealth dot com to book an appointment with us. We’re also going to help you get going with Social Security income planning, also retirement income gap planning. Whether you have a positive or negative retirement income gap, we want to make sure you have a surplus and hopefully you don’t have a negative gap. And also one other thing to make sure that if you’re driving around, you’re heading to Home Depot or Lowe’s or you’re heading to Publix or Kroger or Costco or Sam’s out there in Atlanta, or you’re going over to any of the parks out there to go watch some kids play a different sport, whether it’s soccer or baseball or football or whatever.

Ford Stokes:
And you’re also supporting cheerleaders, sideline cheerleaders like our girls are our competitive cheerleaders. As you’re driving around Atlanta, listen to us during this noon hour and we’re going to make sure you understand you can get something done. You can actually build a tax efficient, fee efficient and market efficient portfolio. You don’t have to just keep listening to the show and never take action. You haven’t made a decision till you take action. So I would encourage you to visit Active Wealth dot com and just click that schedule a consultation button in the upper right corner of the website with me and you’ll get booked directly into a, an appointment into my calendar and you’ll talk directly to me. You’re going to talk to this radio show host. You’re going to talk to the author of Annuity 360 and the author of Taxes on Sale. I’m here to help you. I want to make sure that you’re doing the right thing for you and your future. I’m a fiduciary. That means I’ve got to put your needs ahead of my own and we want to look out for your best interests. Let’s go ahead and and share a very important quote of the week. This is our financial wisdom quote of the week.

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

Ford Stokes:
So here’s what Henry Ford said. He said, Whether you think you can or you think you can’t, you’re right. And if you don’t think you can improve on your retirement plan and you think you should just buy and hold and just hang in there with your investments, then you can do that. And then you’re right that you’re going to get the results that you think you’re going to get, which is, oh, well, it’s going to bump along. It’s going to be okay. And I’ll travel for a while and then I’ll stop traveling when I get a little bit older and my health is not as great as it was, or I didn’t have as much energy as I as I did. Or you can. Grab the bull by the horns and go ahead and make sure that you are inspecting what you expect and and doing everything you can to seek as much knowledge as possible and get educated on how to divest the IRS out of your retirement accounts so you can hold on to more of your money and how you can save six figures during retirement. We think that’s a big deal. If you’ve got if you’ve got over half a million dollars in your 41k, your IRAs, your step IRAs, your four or three B’s or your TSP is. Then guess what? You can save up to six figures during retirement just by implementing a 5 to 7 year Roth ladder conversion before you turn 72 years old. And if you haven’t done that, you’re getting closer to 72.

Ford Stokes:
We can still help you, but it’s a little bit more difficult because when you take RMDs, you’re also you’re compounding the issue, because when you take RMDs, you also have to do the conversion in addition, because the conversion doesn’t count as your required minimum distribution amount. So. Again. I want to I want to share this quote again. Whether you think you can or you think you can’t, you are right. So it comes down to mindset. It also comes down to making a decision, and the best way to make a decision is to take action. That’s what you need to do is reach out to us and just call us at 7706851777. If you listen to the show for a long time and you really enjoy the show, we’ve got guys like Jerry that listen to this show and he’s just working on his houses and he takes a break and gets a sandwich during the lunch noon hour and listens to us. And that’s why we’ve never moved the show. We we thought we might move the show at one point in time to 9 a.m., but we didn’t because we wanted to make sure we were taking care of those folks during the noon hour. But if you’ve been listening to the show for a long time and you haven’t taken action, you haven’t gotten a financial analysis done and you haven’t gotten a financial plan done, and you haven’t figured out how to maximize your Social Security before you turn on Social Security or you don’t understand what’s going on with Irma and and Medicare and how much more you’re going to pay in Medicare when you turn 65.

Ford Stokes:
And you have questions about that, because we can put you in touch with Bonnie Dobbs, who’s our Medicare partner. We can help you with all those things and give you a comprehensive plan. But also if you’re like, Hey, how do I really kick the IRS out of my retirement accounts so that every dollar that I withdraw from my accounts goes to me? We can help you do that. And whether you think you can do that or whether you think you can’t, you’re right. And it’s really comes down to you and I would just encourage you to visit active wealth dot com that’s active wealth dot com and click that schedule a consultation button in the upper right corner. The other thing you can do is understand how to generate retirement income. And we’ll talk about Smart Safe here in a second. But the best step, first step on that is just visit annuity 3060 dot net. That’s annuity 3060 dot net and get that copy of my free ebook. We’re going to take a break. When we come back, we’re going to start talking about the next the number four element of building a smart retirement plan, which is smart, safe. Right. When we come back from the break. So glad you’re with us. Here’s an active wealth show right here on AM nine two, an answer.

Why do you. Let me die. Let me go down.

Sam Davis:
And Social Security will get a big cost of living adjustment next year, but there could be some consequences you might not have considered. I’m Matt McClure with the Retirement Radio Network powered by a merrill Life. A new report by the Senior Citizens League says Social Security beneficiaries could see a cost of living adjustment or COLA as high as 10.1% next year. The reason, inflation running at a 40 year high.

Mary Johnson:
This is a very, very unusual and unprecedented pattern of inflation that we’re experiencing.

Sam Davis:
Mary Johnson with the nonprofit group, told WPTF TV that surveys show inflation has caused about half of Americans to spend their emergency savings and people are carrying more debt on their credit cards. So the highest jump in Social Security payments since 1981 would be a good thing, right? Well, Johnson says it’s better than no increase, but there are some things to be aware of.

Mary Johnson:
In fact, you can get penalized if you think your tax liability is going to be 10% more next year than you’re paying now. You can be penalized if you don’t send in estimated payments or have more money withheld.

Sam Davis:
She told the TV station. The increase would not be enough to cover a jump in Medicare Part B premiums, which are taken directly out of Social Security checks. And she says higher incomes mean some seniors could no longer be eligible for some other government benefits.

Mary Johnson:
And then a whole 15% were made ineligible because they were their incomes increased over the income limit for food stamps or rental subsidies or the programs in their area.

Sam Davis:
So what should you do? Johnson says Prepare now. Talk to a financial adviser to help you get ready ahead of time and contact local nonprofits if you need help paying bills. So are you prepared for the unintended consequences of a larger Social Security check? That’s a key question to consider as inflation impacts all our lives. With the retirement radio network powered by a married life. I’m Matt McClure. Remember, all of Ford’s listeners receive a free financial consultation just for listening to the show. Visit active health.com to learn more and schedule an appointment. Thanks for listening to the active Welsh show and subscribing wherever you listen to podcasts.

Ford Stokes:
I think these vignettes that come from Matt McClure with the Retirement Radio Network are just great. I think that’s very educational. It’s interesting that, you know, we’re going to have one of the largest cost of living adjustments, you know, for Social Security since 1981. The last 40 years, it’s 41 plus years, actually. And it also just means, look, the government is not giving you all the money you you deserve on your Social Security. And you’ve got to take advantage and and build your own income plan. You actually have to build your own income plan. And that that kind of goes into the starts with smart safe. We want to do a good job with a portion of our assets. We want to educate on smart, safe. So say let’s go ahead and play Chapter six, the rule of 100 from my book and 8360. And again, you can get a free copy of my book just by visiting annuity 360 net. That’s Annuity 360 net. And we’ll send out Deborah, I’ll send out a book to you via USPS Media Mail, and we’re happy to put a hardback copy that’s signed by me in your mailbox. All you got to do is visit annuity 360 dot net. So go ahead, Sam, and let’s play the rule of 101st so they can understand how they really need to be safer with their money as they age. Chapter six The Rule of 100. Big idea. You want to risk less as you get older because you have less time to make up any big losses as you get closer to your golden years, many financial professionals advise gradually reducing your risk.

Ford Stokes:
Retirees and pre-retirees don’t have the luxury of waiting for the market to bounce back after a dip. The dilemma is figuring out how safe you should be in certain stages of your life for years. A commonly cited rule of thumb has helped simplify asset allocation. This rule states that individuals should hold a percentage of their stocks that is equal to 100 minus your age. For example, a six year old would have 40% of their holdings in stocks and 60% in fixed income products like bonds or fixed indexed annuities. Why you should follow the rule of 100. Take our current example of a 60 year old. At age 40, your risk capacity is higher. You have more time to rebuild your wealth should you experience a dip in the market. However, at age 60, you can’t afford to risk as much of your portfolio in the market because the time horizon to rebuild your wealth is much shorter. Rule of 120. Many financial advisors now advocate the rule of 120 so they can get a significant rate of return for their clients and maintain management of the portfolio. I disagree with today’s market volatility. A retiree does not want to go back to work in a job making less than what they made before. They must consider following the rule of 100 or at least a 5050 smart financial plan that is built equally with smart risk and smart, safe investments.

Ford Stokes:
Smart safe investment is investment that is not at risk. It’s not invested in the stock market. It is not exposed. To market risks. So smart, safe investing is basically investing in an intelligent way to get you some sort of market like gains and avoiding market risk. But also it is identifying potential pitfalls of what used to be. Smart, safe investing and what’s really turned out to be not smart, safe investing, especially in this period of increasing interest rates. And we used to have slightly increasing interest rates. Instead, the Fed’s going up 75 basis points every couple of months. So let me just share this. You’ve got to be careful about investing in bonds these days because you’re facing you’re always with bonds, you’re facing reinvestment risk, you’re you’re facing interest rate risk. And the biggest of those is obviously the the interest rate risk with bonds. So what is bond replacement? Bond replacement is removing the bonds from your portfolio in favor of investments with higher returns. Why should you replace your bonds? Bonds historically have low bond. Returns are really on the horizon. We’re seeing that also. We’ve got market losses with current bonds that let’s say if you’ve got the bonds you currently hold. They’re going to be worth less than new bonds with higher interest rates because people are going to want the higher interest rate. Also, liquidity is a concern with bonds. You. You want to be able to sell your bond quickly. You may have to sell it at a discount, especially if you’re in a slightly rising interest rate environment.

Ford Stokes:
Bonds used to be considered the safe part of your portfolio with modern portfolio theory that that theory is over 70 years old. From Harry Markowitz, he was given credit for being the founder of that in 1952. That was 70 years ago, folks. Investors consider them to be the bedrock of a stable retirement income plan within your portfolio, and they were also traded on the same exchange. The other thing is, let me ask you a question. Are you really being smart if you are paying advisory and portfolio fees on the fixed income portion of your portfolio? What’s that? To sink in for a second? You’re likely paying some advisor. 1 to 1 and one half percent, possibly even 2%. On bonds just for them to hold it. And listen, if you want more information on this that is laser focused, you can also visit bond replacement. That’s bond replacement. It’s a website that we built just to be able to give you a 2800 word report. That’s a quick and easy read. That’ll give you a lot of ideas on how to replace bonds with things like fixed indexed annuities. But, you know, according to Kiplinger, the Federal Reserve will be raising interest rates this year and slowing its purchase of bonds. So the climate for long term bonds will be less favorable in the future. Bonds are paying historically low interest rates, which means if long term bonds fall in price, we could be looking at a low yield investment for years to come.

Ford Stokes:
Bonds have set interest rates and set maturity dates. They issue a par value of $1,000, meaning you’re loaning the government or a corporation 1000 bucks. There is a length of time you have to leave the bond alone until it reaches maturity. It ranges from 1 to 40 years and there’s a set interest rate during this time when interest rates rise and bond prices fall. There’s no guarantee when you will be able to get your money back. So my question is, if you’ve got an alternative with fixed indexed annuities that can give you a retirement income that you can never outlive, that also eliminate and delete the advisory and portfolio fees because the annuity company pays me as the advisor. Why wouldn’t you consider a fixed indexed annuity or a smart, safe plan at least to come in and check it out? All you’ve got to do is visit active wealth dot com to get started on your smart safe retirement plan, at least a portion of your assets. We’re not saying, hey, go put 70% of your assets into a fixed indexed annuity. What we are saying is you ought to consider replacing a 6040 portfolio instead of having 60% securities and 40% B fixed index annuities instead of bonds. We’re dead serious and dead set on this. We we are passionate about this. Also, if you look at my book in Chapter 15, there’s a there’s a graph in there. So I have to do is visit annuity 369 dot net to get there.

Ford Stokes:
There’s a graph in there that shows. If somebody has $1,000,000 portfolio and they take 40% or 400,000 and sell off their bonds and purchase a fixed indexed annuity that’s tied to a high performing index. They likely will be able to see. A $2.89 Million difference just on that $400,000 growth over a 35 year retirement. Also, they will have saved over $212,000 in in deleted advisory and portfolio fees because they don’t pay that anymore. Also, when we invest with fixed indexed annuities for our clients and we we love tactical asset allocation, we’re going to talk about Smart Risk in the next segment. But we do everything we can to eliminate the the income rider fees and any accumulation rider fees or any rider fees in general and try to keep the fees as low as possible. Again, back to that efficient. Portfolio, that fee efficient investment, we think that’s the right way to go. But fixed indexed annuities offer your long term investment. You can make a lump sum deposit. You can also get up to a 10% bonus on your money immediately as you’re driving around. Let me ask you, are you interested in that? I bet so. So if you are, go ahead and visit Active Walmart.com and click that schedule a consultation button the upper right corner and we’ll will will help you immediately. You can also just pick up the phone and give us a call at 7706851777. Again, 7706851777. You’re listening. Active all show right here on AM 920. The answer. Back.

Producer:
Back. Get up off that thing.

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

Ford Stokes:
And welcome back Activators, the active well show on 14 steps, your chief financial advisor. And I’ve got Sam Davis on the board as our executive producer. Let’s share a little bit of this week in history.

Sam Davis:
It’s this week in history.

Ford Stokes:
So in this week in History in American History. On this date, August 21st, 1959, Hawaii officially became the 50th US state. Hawaii was one of several US states that was an independent nation prior to joining the union of the 50 US states. Hawaii is the eighth smallest in land area, but with 1.4 million residents ranks 13th in population density. It’s interesting that it’s the eighth smallest in land area, but there’s parts of Hawaii like the big island. My gosh, it is big. It’s bigger than people think. We went to Hawaii and went to Kapalua and stayed over there at the Ritz. Those people were fantastic. And if you can experience Ritz-Carlton service, I would encourage you to do that. It was just amazing to be there and take my kids there and they loved it and I just love Hawaii. Absolutely. And pull for those folks. And so it’s just good to share a little bit on This Week in History. In 1959, they became officially the 50th US State and we haven’t had any more sense, although there’s been a push for Puerto Rico and others. So it’s an interesting tidbit there. Now let me finish up and just try to talk about some of the advantages and disadvantages of fixed index annuities as a bond replacement as part of our smart, safe part of this deal. Again, rule of 100, you take 100, subtract your age, and whatever’s left over is the amount of money that should be invested and at risk in the US stock market. Unfortunately, too many of us are investing way too much money at risk, but also the bond portion of our portfolio, even though we’ll get paid out the interest rate on the bonds, more than likely it’s a little scary because, you know, bonds this year lost up to 13.1% at one point in time in this year.

Ford Stokes:
I’m sorry. 80 year olds should not be losing 13% in their portfolio at any time. And we’ve seen people come in with. Tremendous bond portfolios. Where they’ve lost that kind of money, which is really a it’s a significant concern. Now let me talk about the advantages of fixed indexed annuities. One is you limit your losses. And any possibility that you can protect your gains. And you’ve got inflation protection because you’re your money is and your annuity is index linked. So it’s linked to an index. You can get some market like gains. And you’ve got tax deferred growth as well. The disadvantages of a fixed indexed annuity and potential limits on gains. There’s some surrender charges because of the liquidity. They want to make sure they keep holding on your money. And sometimes there’s uncertainty about the exact returns. You can’t. Predict it. But you do get if you get market like gains, you can do a lot better. I would encourage you to invest in fixed indexed annuities and replace the bonds in your portfolio. It is a bold move. It is something you really should consider. And let me ask you, why are you accepting paying advisory fees and portfolio fees on the fixed income portion of your gains because you’re out of your portfolio because you’re not looking.

Ford Stokes:
To get incredible market gains out of your bonds. Are you you’re looking to just get income from your bonds? Why not just generate income? It’s something in one account that is straightforward that you can count on and also income you can never outlive. And also, here’s one hint. With fixed indexed annuity investing. You want to make sure that your interest rate or your illustrated rate that you’re looking at or viewing. On the annuity before you purchase it. Is outpacing and outstripping. The withdrawal rate because. Most annuities that have income rider fees and accumulation rider fees and all these different fees and admin fees. Some of those are like holes in a. In your bucket leaking. Funds out of the out of the bottom of your bucket. We don’t want that to happen because most annuities there are sold wrong. A lot of annuities are. Sold. They are not bought. And there. People are convinced into buying annuities and we like to present options for our clients and let them make the decision. To purchase or not purchase. But the majority. Let me just finish my thought here. The majority of annuities. The account values go to zero after 20 years because the withdrawal rate is higher. The interest credited rate that helps grow the account value. Also, a lot of fixed indexed annuities have two accounts they have. The income account, and that’s the account you’re paid money out of. And they have an account value account, and that’s the account value you could surrender and take with you if you wanted to stop the policy or.

Ford Stokes:
That your kids would inherit or your heirs would inherit. We like investing in fixed indexed annuities where the interest rate is is outgrowing. The withdrawal rate. And so therefore. Guess what? Your annuity continues to grow and the account value continues to grow as well as the income account. We think that’s the right way to go. And we try to be as fee efficient on fixed indexed annuities as we can for. Our clients. And that may not be something you’ve heard before from another adviser. I want to make sure that that’s clear. You’ve got to be really careful in the fees you’re paying with annuities. One last point on Smart Safe here. If you are investing in a fixed index or into a variable annuity, if you invest into a variable annuity or you already are invested in a variable annuity, you need to get that annuity reviewed. And we can give you our annuity x ray at absolute no cost to you. All you’ve got to do is visit. Active wealth dot com and will take care of it for you. But if you have a variable annuity, chances are you’re paying between three and 6% in fees. They have fees including. My piece, which stands for mortality and expense fees. A variable annuity is the kind of annuity you don’t want to own. You want to own a fixed indexed annuity if you’re going to own an annuity.

Ford Stokes:
I would encourage you to do everything you can to replace your bonds with a smart, safe plan with a fixed indexed annuity. That has an illustrated rate that is higher than the withdrawal rate and also has a high participation rate. A pitch or participation rate is how much you get to participate in the growth of the underlying index. There are some annuities out there that are paying 32 to 38% participation rate in the S&P 500, and the annuity company is keeping the rest. We don’t think that’s right. We don’t think you should invest in an annuity like that. All that is is brand. We think you ought to invest in a fixed indexed annuity that has a different type of index, let’s say the Credit Suisse Ravn PAC or the Credit Suisse Momentum or other different indices out there. There’s the JPMorgan Cycle Index. The Bank of America has some indexes that have been performing well, and they’re giving you 90 to 95% of how that index grows. And the company is getting 5 to 10% of how that index grows. That’s how they make money off of your money. But we don’t believe they should get 68% of the growth on your money. We don’t think that’s right. And so you’ve got to do everything you can to know what you’re buying. Because also with an annuity. It is. A. The contract between you and the annuity company. It just is. And we help you. And we want to represent your your interest and your needs, for sure.

Ford Stokes:
And we’re always acting in a fiduciary capacity. We want to do everything we can to put your interest first. And now let’s talk about smart risk. So you want to consider structured notes. You want to consider a tactical asset allocation. A structured note is a bond plus a derivative, and it can get you a higher rate of return as long as the S&P 500, the NASDAQ 100, and the Russell 2000. With the notes that we sell that we actually present to our clients as allocation sleeves within their portfolios, we don’t get paid any commission on these, but because we’ve stripped out the brokerage commission out of these, and so therefore we’re able to give you a higher rate of return than if you go in and try to go directly to the bank. And what we recommend is a smart risk way of going about this, which is laddering notes with five consecutive notes over five consecutive months, with five different banks, with five different starting points in the indices, with five different coupon rates. That’s what we recommend because we want to diversify your risk, because chances are if one of your notes hits the 30% threshold for the trigger event, where then your your principal rides the market from there. That’s fine. But we want to do everything we can to say, hey, you know what? The other four likely won’t hit that trigger level 30% lower and another 30% lower and another 30% lower, etc.. That’s one of the ways that we diversify the risk for our clients and invest in a structured note ladder.

Ford Stokes:
That’s what we appreciate. Also, tactical asset allocation is probably the most important thing. You want to have an actively managed portfolio strategy, you just do. It involves shifting investments in your portfolio to take advantage of pricing anomalies and strong market sectors. It gives you extra value to you as an investor because your portfolio will benefit from advantageous market changes. We look every single month and say, Hey, what allocation class is going to do better this over the next month or over the next three months? We don’t just ride the lowest of the lows. We don’t believe in just hanging in there with your investment. And also, it’s also considered a moderately active strategy because portfolio managers will return the investments to their original arrangement once the desired profit is achieved. That’s another way of of achieving the goal. So why should you use tactical asset allocation? You want to reduce the risk. You want to have smart risk as part of your portfolio. You want to increase returns and you want to truly diversify your portfolio. When we come back from the break, we’re going to finish up on the smart risk portion of a of building a smart retirement plan. And we’re also going to dive straight into smart tax solutions. When you’re investing in your overall portfolio as well, you’ll stay active. Well, show return, aim 920. Answer you want to come back to as we finish up on Smart Risk and also move into smart tax investment solutions.

How we’re feeling. My family doctor. Just what I had.

Ford Stokes:
And welcome back Activators, the active well show on Fort Stockton, Chief Financial Advisor. I’ve got Sam Davis, executive producer with me. And on this date in 1987, August 21st, 1987, the hit movie Dirty Dancing was released in American theaters. The film, starring Patrick Swayze and Jennifer Grey, earned 214 million worldwide and was the first movie to sell more than 1 million copies on home video. Got to love the song. And yes, we’ve all had the time of our lives, so we want to make sure that we’re having the time of our lives and and the time of our life, I guess I would say, to fit back to the song. And one of the ways to do that is you want to solve problems.

Producer:
It’s time for this week’s Problem Solver.

Ford Stokes:
So here’s a real life situation. These are people that I know that I went to college with. It’s a married couple ages 58 and 55. They’re a little bit older than me and want to retire in 7 to 10 years. They are saving $52,000 a year in tax deferred, 41k accounts for their retirement. They’ve saved $1.2 million total in their 41k plans, and they both have worked for the same company their whole careers because this is all tax deferred money. They’re concerned about their future tax risk. And guess what? They’ve got it. They expect to receive $47,000 in combined Social Security income per year when they do retire at age 67. They’re expected retirement expenses are right around 6000 a month, depending on what happens with inflation. The solution is the married couple is choosing to invest into an IUL policy, reducing their taxable income now and generating tax free income for retirement later. And they’re investing like $2,500 a month for ten years. They’re doing a ten pay and they’ll be done by the time the wife is 65 years old. And that’s a really good thing, because they’re going to generate over $51,000 in tax free income, which we think is a really sound, smart idea. But the other reason was, is because we haven’t even started on the Roth conversion and they’re making too much money to do the conversion because they’re making, you know, right around 300,000 a year right now, and they’re spending a good amount of it.

Ford Stokes:
And we could convert like $40,000 to take them up to $340,100, which is the top end of the threshold for this year in 2022 for the IRS tax brackets in the 24% bracket. Additionally, they’ll begin converting some of their tax deferred retirement savings into Roth IRAs once they stop working, which is going to be right around when she turns 65 and he’s 68 years old because they really want to make sure that they’ve got a well funded retirement plan so they can go have fun because they want to reduce their future tax exposure. A couple is also investing 10% of their portfolio into a structured note ladder as part of the smart risk strategy that we just talked about. So they’re basically taking 120,000 and they’re actually going to go up a slightly more than that, going to do 150,000. So if we’ve got five notes over five different months, that’s 30,000 apiece. So and they’re getting a disproportionate share in interest than they would have gotten if they invested in a bond or they invested in the bank. Cds, even you’re still working. You can still work with us. We want to do everything we can to help those folks that are kind of in that red zone of retirement. You’re within 5 to 10 years of retirement. Really, it’s 2 to 5 years is that red zone of retirement, but call it if you’re not going to retire.

Ford Stokes:
And we’ve talked to some people this past week that are retiring 12 years from now. If you want to retire successfully, you really need to plan early. Inspector G. Expect and get prepared. Putting a plan in place now while you’re still working is a great idea. We can also help you plan for your Social Security benefits, and that can make a big difference during retirement. But also understanding that we’re going to help you build your retirement income plan is a good idea as well. And you want to have your money more diversified in different tax buckets. That problem solver, that couple, they’re invested into a smart tax solution with investing in in life insurance or investing into an index universal life policy that’s building up a death benefit protection, but also building up cash value that they can take as loans against the policy. And those loans against the life insurance policy are absolutely 100% tax free because there’s no taxes on loans called a Rule 7702 plan. That is the IRS code Rule 7702. You can look it up on IRS.gov. You can type in and search bar 7702 and it’ll bring up that IRS. You want to have your money. Like I said, you want to have your money diversified in different tax buckets, folks. You really do tax deferred, tax free and taxable. Having too much in a tax deferred account is one of the biggest mistakes we see people make.

Ford Stokes:
And these folks have at 1.2 million. I haven’t talked to them in a long time and they saw me on Facebook and they were like, Ford, we need to talk to you. They’ve got a real tax problem. They’ve got a $1.2 Million tax problem. And we’re going to go into more in depth on smart tax next week for sure. But I’m going to go ahead and go into it a little bit now. So smart tax, you want to divest the IRS from your retirement accounts with life insurance indexed universal life insurance 1035 Tax free exchange of cash value, life insurance into index linked universal life insurance policies and Roth IRAs. Did you know that different investment accounts are taxed differently? By understanding how different accounts can be taxed? You can ensure your money is working, how you need it to, and when you need it to. We want to do everything we can to help you better understand how to plan for your retirement. And before we discuss the types of retirement accounts, there are two terms that you really should be familiar with. Tax exempt. A tax exempt account is tax when you contribute, but not when you withdraw. This is the great benefit in retirement because you don’t have to worry about being in a different tax bracket than when you were when you contributed those dollars.

Ford Stokes:
Tax deferred. A tax deferred account gives you the tax benefits upfront. You won’t pay taxes when you contribute, but you will pay taxes on any distributions. Hopefully when you are at a lower ordinary income tax level, efficient tax rate or effective tax rate, I should say that’s the benefit of life insurance. The greatest benefit of life insurance is the death benefit paid out by the insurer is usually tax free. So the the wife, if she inherits after the husband dies, she gets paid out a death benefit. Sometimes the beneficiary may be required to pay taxes on any interest accumulated by the policy, but never on the base. Amount indexed universal life policies. Another type of insurance that earns cash value indexed universal life policies give the policyholder the chance to earn a fixed or equity indexed rate of return. There’s only two types of tax free investment accounts out there, folks. I mean, absolutely. Tax free number one is life insurance. Number two is Roth IRAs. That is smart tax. That is a smart tax strategy, is investing in both of those. We’re going to talk more about this next week. And honestly, I could do two whole shows on on tax smart investing, but smart tax is the way to go. Let me ask you, as you’re driving around, do you think the taxes are going to go up in the future? Sam and I do.

Ford Stokes:
We do. We think taxes are going to go up in the future. We’ve got trillions and trillions of dollars in debt, national debt. The only way to really pay it off, they can try to inflate it away or whatever. The only way to really pay this thing off. Guess what? They got to raise taxes also with. Inflation and and debt. It’s going to force the government to provide less services, fewer services, fewer entitlements. And tax you more. That’s common. Also, if you don’t have an idea on smart income, we’ll talk about smart income next week. It’s part of that smart, safe plan, too. But. If you don’t have an idea on smart income, you may be surprised to know that the CBO of the Congressional Budget Office is estimating that the Social Security. Account that funds Social Security. The Social Security benefits will be out of money in 2034. That’s 12 years from now, folks. So if you don’t think you need a. Smart income plan. I would beg you to reconsider. You need to take control of your own investments out there. And just like this married couple we talked about and the problem solver. They’re doing that. They are investing $2,500 a month. It’s a mortgage every single month. But. Their mortgage is done in ten years and suddenly they’re getting $51,000 out of it. Out of it. Not a lot of houses do that. It’s the final.

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

Ford Stokes:
On this week’s show, we talked about three new elements of a smart retirement plan. We talked about smart, safe. We talked about smart risk and we talked about smart tax. We’re going to talk more about smart tax and smart income on next week’s show. We hope we’re building kind of a wall for you with each brick. With a strong foundation. To help you build that smart retirement plan. That’s our goal. We’re going to try to be done right after Labor Day weekend, I think. With this series, it’s like a five part series. That’s what we plan for. It may stretch to six, I don’t know, but the Smart Retirement Plan has a lot of elements in it. Also, if you want your own smart retirement plan, we encourage you to visit active wealth. We also had a vignette on the cost of living adjustment. It’s going to be one of the highest cost living adjustments. And in history, it’s going to be. You know, it’s going to go all the way back to the largest increase since since 1981. All you got to do is reach out to us at Active Ofcom. We’re so glad you’ve been with us here on the Active Wealth Show this week. Hope you’re enjoying. This series on smart retirement planning and come back next week to learn more about smart tax and smart income planning. And we’ll have another market update for you and another problem solver where we’re helping solve the problems of our prospects and clients when they come into our office. I think a lot of people are learning from those stories. We’re trying to share one every single week. Thanks so much for being with us. Remember, if you’re trying to seek information about retirement, if you’re going to be a bear, be a grizzly, try to learn as much as you possibly can and hope it has a great week. Come right back next week to learn more about smart tax investing and smart income investing on the Active Owl Show right here on AM 920. The Answer.

Producer:
Thanks for listening to the Act of 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 Fareed Stokes at 7706851777 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 BC 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.

Sam Davis:
Fixed annuities, including multi year 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. Structured notes involve risks not associated with an investment in ordinary debt securities. The securities are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. Nor are the obligations of or guaranteed by a bank. The securities will not be listed on any securities exchange and the secondary trading may be limited. Therefore, there may be little or no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity. The securities are subject to the credit risk of the issuing bank, and any actual or anticipated changes to its credit rating or credit spreads may adversely affect the market value of the securities.

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