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“Why You Might Want a Greater Sense of Security”It is most important in retirement is to have your money secure and protected. There is, however, such a thing as being so conservative that it may have more disadvantages than advantages relative to one’s finances. What am I talking about when I say you may be too conservative? During the 1980s and 1990s we had extreme bullish runs in the stock market. During those times, people were feeling extremely confident because the market was booming and a lot of people were making a lot of money from the market. Unfortunately, many didn’t take into consideration what may happen if and when the market turned around and those returns were no longer available. Unfortunately, that is what eventually happened and the market has been a roller coaster ever since with little or no returns to show for it. People were only concerned with and focused only on the high returns they were getting, and how fast they were getting them. The market provided some people a vehicle to accrue fortunes and accrue them fast. Obviously, with this going on, people would not change their focus, unless they had reason. Well, they eventually were given a reason. The market started going in the opposite direction, and after being comfortable with all of these gains, people had to quickly accept the reality that those gains just weren’t happening anymore, and might not happen for a while. Therefore, their views on investments also started turning in the opposite direction. Just like receiving high returns from the market is history, so should the mindset that you can quickly get high returns from the market. Many people started taking a much more conservative approach as to where they put their money. This isn’t necessarily a bad thing. It is definitely prudent to be conservative with your money. The market took such a toll on their money that they ran to the savings vehicle backed by a federal guarantee to ensure that it won’t happen again. The route that they chose, (CDs) provides them with very little guaranteed interest, but it is protected by the federal government (FDIC). The fact of the matter is that … This “safety zone” is just TOO conservative! It actually does the complete opposite of what the market did with their money (provides virtually no return), and, many times, it actually erodes their principal! How does something so secure erode one’s principal? CD’s do offer security and safety to your principal. However, when you look at the amount of money left after taxes and inflation, you will see that the buying power may very well be eroded over time. Let’s break this down:Taxes aren’t much of a surprise. We know that they exist and we know that we have to consider them when evaluating our finances. Whether you pay them once a year, quarterly, or they are taken out of every paycheck, they are always there and we expect it. In addition, we have inflation, the silent tax. Inflation is more subtle and sporadic. Consider the price of healthcare, food, gas, clothing, etc. over the last decade. The prices of those basic living necessities have risen over time. As of February 2012, the rate of inflation is at 2.9%. [1] Now let’s compare it with the current CD yield. As of March 26, 2012, a typical 1-year CD is yielding .69%! [2] After paying taxes on the interest of that low-yielding CD, and considering the current rate of inflation, your spending power with that money will slowly dwindle. So, in reality, your principal is protected in a CD, but relying only on CDs may hurt your long-term savings plans because the low returns simply cannot keep up with inflation, and your purchasing power will be eroded over time. This is why I do not recommend relying only on CD’s in retirement. Having emergency money liquid, in CDs or a savings account is a good idea. But no more than what may be needed in case of an emergency.
A Fixed and/or Fixed Index Annuity! These products will protect your principal while offering guaranteed* income for life all at the SAME TIME! Your specific financial situation will determine which specific product(s) are appropriate for you. Contact us or Call us at (954)781-2220 so we can help you put together a unique plan tailored to your unique financial situation. With a Fixed Annuity, you will receive a guaranteed interest rate, normally higher than that offered by CDs. Your principle is protected by the legal reserves of the highly rated insurance companies that we use as well as state guarantee associations and reinsurance companies. With a Fixed Index Annuity, you can participate in the upside of the market without participating in the downside of the market! When the market goes up, you will receive some, not all, of the gains. BUT, when the market goes down, you will not get ANY of those losses! You have a guaranteed “floor” interest rate of 0%. In that case “0 is your hero”. To me, it makes much more sense to place a portion of your monies into a Fixed Index Annuity because it is the only product that… Offers the protection of principal people seek from a CD and the potential for higher returns from the market. The contractual guarantees** of your annuity GUARANTEES* you INCOME FOR LIFE no matter what happens in the market. Call us now at 1-877-805-0151 or fill out this short survey to find out more about how you might receive guaranteed* income for life and protect your principal at the same time! *Annuity product guarantees rely on the financial strength and claims-paying ability of the issuing insurer. |
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