“It was the best of times, it was the worst of times.” Dickens often quoted opening to the Tale of Two Cities, might just as easily be applied to how we think annuities fit into retirement – right now.
Every week people reach out to the Annuity Guys to ask if this is the right time to buy…[continued below video]
**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
[continued] …an annuity – after all, we are seeing global interest rates at their lowest level in decades. So, some people say they are just going to wait until rates go up before making any decision. But what if rates don’t go up? We look at what is happening in Europe and to bonds in many other countries wondering if that could possibly happen to the United States? For those of you who wonder what we mean, just consider Europe for a moment – nine of the major economic countries in Europe are issuing governments bonds at negative yields on maturities. To state it in the simplest way, bond investors are paying a fee to European governments for the right to lend them money.
So what does that mean for annuities? Insurance companies take a much longer perspective than we typically do as individuals. They have to make decisions based on the financial times that we live in while remaining profitable for the long term – they are charged with protecting their obligations to their clients. When they enter into a new contract, they have to be certain they can fulfill their financial commitment with their investment options at that time. Most of us have assumed that interest rates will improve and this war on retirement savers will end; but what if we enter into a time of deflation as it appears they are fighting in Europe? If that were to happen, annuity income and **guarantees would be forced to decline substantially further for new clients.
As Annuity Guys, we know that you have to make decisions based upon your current circumstances and needs. We always have an eye toward the future and what we think will happen, but we also like to know that our clients have foundational **guarantees that will empower them when they face the economic uncertainties that are almost inevitable. Use annuities for what they do best – safe growth and income **guarantees; regardless of what the stock or bond market does.
By Christopher Whittall
What on Earth has happened to bond yields in Europe?
As much as €1.5 trillion ($1.7 trillion) of euro area debt maturing in more than a year now pays a negative yield, according to J.P. Morgan. That compares to none whatsoever a year ago.
German government bonds offer negative yields on maturities up to six years, according to Tradeweb, along with those in Denmark. For five years, the Netherlands, Austria, Sweden and Finland are in the club. For four years, add France and Belgium. In Switzerland, bonds out to a whopping 13 years in length have negative yields.
And there’s no sign of this trend letting up thanks to fears of deflation and further central banks easing policies.
Here’s what it means for financial markets:
What is negative-yielding debt? In a nutshell, bonds that investors have to pay to own before adjusting for inflation. That might seem like a dud investment, but whether an investor actually loses money by holding the bond depends on what exactly happens to inflation. If it is lower than the yield on the bond, then investors can still make money in real terms. An investor can also make money by re-selling the bond at an even higher price than where they bought it.
How did we get here? A combination of falling inflation and aggressive central bank action. Investors buy bonds in the expectation that they will make a positive return after inflation. If they expect consumer prices to fall, as they did in December in the eurozone, some investors will be willing to buy bonds with negative yields. Central banks have reacted to deflation fears by aggressively easing monetary policy, such as cutting deposit rates into negative territory. This has helped the stockpile of negative-yielding bonds to balloon worldwide to $3.6 trillion – or 16% of global government bond markets.
So how have negative deposit rates contributed? Central banks in the euro area, Denmark and Switzerland all now charge money to hold bank deposits, which has ripple effects throughout the market.
J.P. Morgan calculates there is currently €220 billion of bank reserves subject to negative interest rates, which looks set to grow exponentially because of the ECB’s forthcoming colossal bond-buying program. Plowing the money into negative-yielding government bonds can appeal to banks when the alternative is to pay even more to store cash on deposit.
Why does this matter? Because “[it] changes fundamentally” the equation for buying bonds, according to Iain Lindsay, fixed income portfolio manager at Goldman Sachs Asset Management, which handles over $1 trillion in assets. The notion that yields are floored at 0% has been “broken once and for all”, he said. Previously, investors assumed bond prices couldn’t go above a level equivalent to a 0% yield (prices rise as yields fall). […Read More at the Wall Street Journal]
Using OutCome Based Planning™ for Your Retirement
We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.
"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available."Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"
This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.
When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.
Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.
Selecting the Best Annuity & Retirement Income Advisor
Are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality advisor is now as close as a click or phone call away.
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"
We are fortunate to have a select few who we believe are truly the highest qualified advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best options available for your retirement planning.
"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."
"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."
Why Searching for the Best Annuities on Your Own Can be so Frustrating...Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception!At first, it may seem that researching will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you one or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained.So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that they pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly.How can you find the best annuities for your unique situation?
- Use the internet cautiously;
- Work with a vetted and experienced specialist;
- Do not settle for that one dubious best plan. Compare multiple Outcome Based Plans to decide on the one that is truly best for you;
- Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
- Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
- Know the Five Vital Factors (listed above) that an experienced specialist must answer before helping you select the best options for your situation;
- Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...
** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
They are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
*Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)
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