Smart Safe Investing Transcript

Producer: [00:00:00] Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract guarantees are backed by the financial strength and claims paying ability of the issuer. 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 project the performance of any specific investment. It is not a solicitation or recommendation of any investment strategy. Welcome to the ActiveWealth.com show with your host Ford Stokes, for it is a fiduciary and licensed financial adviser who places your needs first. He’ll help you protect and grow your wealth. The ActiveWealth.com 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: [00:01:24] And welcome the ActiveWealth.com activators on Ford Stokes the chief financial advisor. I’m joined by our esteemed executive producer Sam Davis, who also has got the new moniker of the new title of Weekend Ambassador. He’s the one that welcomes us to the weekend here on the active. Well, show. Sam, say hello to the folks.

Producer: [00:01:46] Yeah, I got to welcome all of our activators to the weekend. It’s a hot one here in Atlanta, Georgia. Atlanta is living up to its second name, Hot Lanta, for sure. So stay cool, put on the sunscreen if you need to and enjoy the weekend.

Ford Stokes: [00:02:00] It’s even hotter for a guy that’s originally from Kansas. So I’m sure that it’s even the heat’s even getting to you a little bit more than some of the rest of us who were born and raised here. Sam, for

Producer: [00:02:11] Sure. You know, Kansas,

Ford Stokes: [00:02:12] We’d get up to the triple digits in July, but really

Producer: [00:02:15] One hundred degrees in Kansas. It doesn’t feel as hot as ninety degrees in Atlanta, Georgia.

Ford Stokes: [00:02:20] It’s just tough here. That’s a wet heat here. It’s on you. It’s like it’s like an electric blanket that you don’t and a cooler of hot water and then just put on just go out and play tennis. Yeah.

Producer: [00:02:34] If you need to do yard work, be done by 10 a.m..

Ford Stokes: [00:02:37] That’s right. I get up early, bird gets the worm there. All right. So let’s get straight into the market. Update your ActiveWealth.com market update us. GDP falls short as supply chain disruptions and labor shortages thought the comeback. The US economy grows at six point five percent annual pace in the second quarter. The US economy grew less than expected in the three months through June as supply chain disruptions and labor shortages slowed the pace of economic activity while the country reopened from its covid-19 Lockout’s Gross Domestic Product. The broadest measure of economic performance grew at six point five percent annual rate during the second quarter, according to an advanced estimate released Thursday by the Commerce Department, analysts survey. By repetitive, we’re expecting eight point five percent gross who are literally two points lower than what the expectations were. First quarter GDP was revised down from six point three percent from its previous reading of six point four percent. The above trend growth in the second quarter reflected the continued reopening of the US economy and government support via a business loan, stimulus checks and extended unemployment benefits. Thursday’s report offers more evidence that the stimulus provided surprisingly little bang for its buck, with the economy quickly pushing against unexpected supply constraints instead, which have driven inflation higher, said Paul Ashworth, chief U.S. economist at Capital Economics. Businesses have since the economy reopened, navigated supply chain issues caused by factories shutting down to help slow the spread of covid-19. They’ve also struggled to find workers as extended unemployment benefits have encouraged many to stay home.

Ford Stokes: [00:04:24] The issues have combined to lift core personal consumption expenditures. The Federal Reserve’s preferred inflation measure to three point four percent annual growth, the fastest in nineteen ninety two. Looking ahead, economists worry that headwinds to the economy remain. Supply chains are far from getting back to normal, and the story of the covid-19 pandemic, including variants, is far from being finalized, said Mark Hamrick, senior economic analyst at Bankrate Dotcom. And stocks rallied as GDP continued to fall short of expectations and the Robin Hood IPO was on tap. US stock indexes were higher Thursday as traders assess the disappointing gross domestic product report ahead of Robinhood markets. Ink’s initial public offering, the Dow Jones Industrial Average rose to around twenty two point four point six four percent, while the S&P five hundred advance point three six percent, both hitting fresh records. This as the Nasdaq composite ticked up point zero five percent. The gains come a day after markets closed mixed following the Federal Reserve’s decision to keep policy on hold with emergency measures in place while reiterating its belief that the inflation remains transitory. US GDP, like we said, grew at six point five percent, seasonally adjusted annualized rate in the second quarter, according to Census Department. The rating, which was below the eight point five percent pace that the analysts surveyed by Repetitive had expected. As we’ve mentioned before, and stocks Robinhood Markets Inc priced fifty five million shares sold in its initial public offering at thirty eight dollars apiece, the lower end of its market range.

Ford Stokes: [00:06:02] The IPO, will raise two point one billion dollars, giving the trading app company, which trades under the ticker hood Odie’s, a market value of nearly thirty two billion dollars. Facebook Inc reported earnings and sales that exceeded Wall Street estimates but warned revenue growth would slow due to tough comparisons on the company’s quarterly earnings call. CEO Mark Zuckerberg said Facebook will in the coming years transition from a social media company into a metaverse company. Ford Motor Company posted a surprise quarterly profit and raised its earnings guidance as the chip shortage has caused the automaker to focus on higher margin vehicles. Amazon Inc will release its quarterly results after Thursday’s closing bell. Elsewhere, Softbank Group is selling forty five million Bubar technology shares in order to cover its losses in its global and Alibaba. According to CNBC, Deti Global surged after a seven report said that the ride hailing company was considering going private to appease Chinese authorities, which called the report. A rumor went public on the New York Stock Exchange on June 30th. In commodities, West Texas Intermediate crude oil rose fifty seven cents to seventy two dollars and ninety six cents a barrel, and gold jumped twenty four dollars and 30 cents to eighteen hundred and twenty four dollars an ounce. And the overseas markets were in rally mode, so what does all this mean? There’s been a lot of market volatility, especially since Monday, a week ago, where we saw the S&P 500 lose one point eighty nine percent of its value, only to see a rally far exceed that.

Ford Stokes: [00:07:46] It’s really volatile for people that are pre retirees and retirees, they’re looking to plan for their future. They don’t really have an idea of what to do next. And they’re really looking for just a smart sound way to move forward. And what I would encourage you to do is consider a smart financial plan. We’ve got a lot of requests for this. And again, we’ve talked about the last couple of weeks. We’re going to talk about it again today, but we’re going to go into more detail and I’m going to give you a great bank CD alternative starting right at the break, right after the break in segment two. But again, a smart financial plan equals smart, safe plus smart risk plus smart tax. That’s what a smart financial plan is. You’ve got to have smart, safe strategies, smart risk strategies and smart tax strategies when you’re investing. And if you don’t have those or you don’t know what those are, I would encourage you to visit ActiveWealth.com. That’s ActiveWealth.com. And you can click that, set an appointment button in the upper right corner and we’re happy to help you. We’re here to protect your hard earned and hard saved dollars. It matters to us. We care a lot.

Ford Stokes: [00:08:59] And we want to deliver for all of our activators. If you’re want to do an activator, is an activators somebody to listen to show who wants a tax efficient vision and market efficient retirement. They want a successful retirement. And we’re going to help you figure it out right here on the ActiveWealth.com, right here on AM to one of the answer today. We’re going to try to educate you on how to invest in a smart, safe way, how to invest in a smart tax way, and how to invest in a smart risk way. And you’re going to really like this show. It is an important show. I’m glad you’re with us here on AM. Not to of the answer this weekend. We’ve got the weekend ambassador with Sam Davis. He’s already welcome to the weekend. Even though it’s a hot one. We’re we’re ready to go today. I’m kind of pumped up and ready to go. And I cannot wait to share this incredible sound strategy, this smart, safe strategy. Right after the break. It was the ActiveWealth.com right here. And I am not sure the answer. New activators, come right back to here. This brand new and different sound, smart, safe investment strategy.

Producer: [00:10:43] 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 project the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Ford Stokes: [00:11:14] And welcome back, Activators, the ActiveWealth.com show, so glad you’re with us, Sammy Davis, our esteemed executive producer and ambassador. The weekend is with us. He’s already welcomed us to the weekend. And we’re talking about building a smart financial plan again today. But we’re talking specifically on Smart Safe right now and. Sam, go ahead and roll that sound of her beating the bank seeds

Producer: [00:11:39] Need a higher rate of return from your safe money. There’s enough. It’s time to beat the bank CD rates.

Ford Stokes: [00:11:46] So are beating the bank. CD segment is special today. So most folks, the next annuities are basically seven, 10 and 14 years long. They tie up our money for seven, 10 and 14 years, but they can also. Give us important income for retirement, and they can also give us market like gains without market risk. Now you can have shorter annuities called multiyear guaranteed annuities or MYGAs. Multi year guaranteed annuities, just NYG A what a multiyear guaranteed annuity is an Amiga is the nickname for it. So a two year MYGA is paying two point one five percent that we can offer today. A three year MYGA is paying two point four percent and a five year mortgage paying three point zero five percent. Well, that’s not awesome, but it’s a lot better than point six of one percent, point six of one percent. So less than one percent from like an ally bank. And if you go to, you know, Bank of America or truest or any of the other banks, you’re going to be shocked at how low their rates are. I mean, it’s less than I mean, it’s like point zero, five percent in a one year banks. And right now it’s crazy if you walk into those bricks and mortar banks right now, it’s just you’re losing buying power by doing that. So I would encourage you to not do that because you’re you’re going to end up it’s a melting ice cube strategy. So let me give you a better strategy.

Ford Stokes: [00:13:23] This strategy is amazing. There’s a product out there and we’re not going to name the carrier. All you’ve got to do is call our office at (770) 685-1777 in this carrier. He’s got an incredible product that’s a five year product we just saw they’ve got a three year protection period where the interest grew over three years and it locks in the gains at the end of the three. Well, we’ve seen clients lock in their gains at thirty six percent over the three year period. That’s 12 percent a year. Compounded interest, not simple interest rate, compounded interest. And all you have to do is tire your money out for five years. That is remarkable. You can also take some income like a five percent penalty free withdrawal, each of those three years or five years, if you want. Starting at the end of year one or two, the beginning of your two, but I don’t want to confuse you. I want to make sure you understand this is a five year fixed index annuity. It is tied to a Credit Suisse index. And it’s delivered thirty six percent even including the pandemic. Thirty six percent over the last three years. Without any risk of being in the market and the only tied your money up for five years. And if you want to get a free illustration in a free retirement income plan on this product as a Bankside alternative or a save money alternative or a bond replacement alternative.

Ford Stokes: [00:15:00] It’s part of a smarter financial plan, I got to tell you. All right, let me ask you, as you drive around today, heading Home Depot, you’re heading to Lowe’s, you’re heading to Publix or Kroger, or you’re going to a youth sports event and you got some travel baseball going or soccer still and. And you’re or you’re headed to take your child to cheer practice, like we take our twin 14 year old girls at your practice. You know, let me just ask you. If you got thirty six percent. Growth. Over a three year period in a product that could not lose money in the market because your money was originally invested in a 10 year US Treasury bond, and they took the interest from that at the end of year one and invested into options in this Credit Suisse index. And that index grew thirty six percent or more. And your participation rate in it netted you thirty six percent growth over that three year period. And then they can lock in your gains where you can never move back. You can only move forward and you’re able to cash your money out two years from now depending on how the index does after that. But your original gains and everything, let’s say you put one hundred grand in this strategy. Three years ago, you’d have one hundred and thirty six thousand dollars in that product today.

Ford Stokes: [00:16:22] And two years from now you could take out one hundred and thirty six thousand no matter what. And you had no risk in the market and there were no portfolio fees eroding or advisory fees eroding that money. Would you be interested? I bet you would. So what I would encourage you to do is visit ActiveWealth.com, go ahead and visit ActiveWealth.com, click that set an appointment button in the upper right corner or just send me an email to Ford@ActiveWealth.com. That’s Ford@ActiveWealth.com. And we’ll get you my free book. Annuity 360, and we’ll also get you a free illustration of this five year strategy. Next, we’re going to play Chapter six and Chapter seven for my new book, Annuity three sixty one. The first one talks about the rule of one hundred and the second one talks about the four percent rule. Both are very important rules to understand and risk management and also expense management so that you can make sure your money lasts. And you’re not just depending on your kids and Social Security in the future and you can really see your nest egg grow. Sam, go ahead and play Chapter six and Chapter seven for my new book, Annuity 360, detailing the rule of one hundred and the four percent rule. And we’ll talk about both of them when we come back from the break, right after these two important chapters,

Ford Stokes: [00:17:49] Chapter six, the rule of one hundred. 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. Retirees and 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 one hundred minus your age. For example, a six year old would have 40 percent of their holdings in stocks and 60 percent in fixed income products like bonds or fixed indexed annuities. Why you should follow the rule of one hundred. 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 one. Twenty many financial advisers 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 one hundred or at least a fifty-fifty smart financial plan that is built equally with smart risk and smart, safe investments.

Ford Stokes: [00:19:33] Chapter seven, the four percent rule, big idea, withdrawing four percent or less annually from your portfolio will ensure that you will not draw down your account too quickly and that your income lasts for your entire retirement. What is it, the four percent rule is a rule of thumb used by investors to determine how much retirees should withdraw from their retirement account each year. This rule should ideally help provide a steady income stream for the retiree, while also maintaining an account balance that keeps their income flowing throughout retirement by withdrawing only four percent from your account. Many financial professionals believe this will help your wealth last through your retirement and that you will be able to live comfortably with this withdrawal rate. This rule helps financial planners and retirees set the withdrawal rate for their portfolios. Life expectancy also plays an important role in this process by determining if the selected rate will be sustainable. Retirees that live longer will need portfolios to last longer, and medical costs and other expenses could increase as retirees age. Where did this rule come from? The four percent rule was created using historical data on stock and bond returns over a 50 year period from 1926 to 1976, before the early 1990s. Experts generally considered five percent to be the safe amount for retirees to withdraw from their portfolio each year. In 1994, William Bangin a financial adviser, conducted a study of historical returns. He focused heavily on the severe market downturns in the 1930s and the 1970s bank and concluded that even during those markets, there was no historical basis that a withdrawal rate based on the four percent rule would exhaust our retirement portfolio in less than thirty three years.

Ford Stokes: [00:21:25] What about inflation? Some retirees will choose to stick to the four percent rule all the time and never adjust for inflation. However, the rule allows retirees to increase the withdrawal rate to keep up with inflation. There are two options to do this. The first option provides steady and predictable increase, while the second option will more effectively match your income to cost of living changes. Option one setting a flat annual increase of two percent, which is the Federal Reserve’s target inflation rate option to adjusting withdrawals based on actual inflation rates. The first option provides steady and predictable increase, while the second option will more effectively match your income to cost of living changes to scenarios where you should avoid using the four percent rule scenario. One A severe or protracted market downturn can erode the value of a high risk investment vehicle much faster than it can in a typical retirement portfolio. Be cognizant of the health of the market and talk with a professional. If you have any questions or want to make changes to your portfolio scenario to the four percent rule does not work unless you commit to it year in and year out. Violating the rule for one year to splurge on major purchases can have severe consequences down the road. It will reduce the principal, which directly impacts the compound interest that the retiree depends on for sustainability.

Ford Stokes: [00:22:50] Hope you enjoy those two chapters. My new book, Annuity 360. When we come back from the break, I’m going to go in a little bit more detail about the rule of one hundred and the four percent rule as part of our smart, safe portion of our smart financial plan. You’re the ActiveWealth.com right here on AM Next with the answer. We’ll be right back.

Producer: [00:23:12] But this time.

Ford Stokes: [00:23:25] Welcome back, Activators, the ActiveWealth.com Ford Stokes chief financial adviser gets Sam Davis, our esteemed executive producer, with us. And we just heard Chapter six in Chapter seven from our new book, A.C. 360. And if you want a copy of my new book, A.C. 360, all you’ve got to do is visit Annuity 360 dot net. I want to talk a little bit about the rule one hundred. I want to be clear. You subtract, you take one hundred, you subtract your age. Let’s say you’re 60 years old for easy math here. That means you got 40 left over. Right. One hundred minus 60 equals 40 or 40 percent of your portfolio. Then according to the rule, one hundred should be invested into securities. Many of you are probably gasping right now as you’re driving around. Don’t drive off the road because you probably have 80 plus percent invested in the stock market right now. Let me ask you, if we have another downturn like we did in 2008 or the in 2009 with the S&P 500 lost from March one, 2008 to March 30th, 2009, the S&P 500 lost fifty point one percent of its value. Could you afford to lose fifty point one percent of your retirement nest egg? And the chances are that the answer to that is no. So we want to make sure that you don’t have a change in lifestyle during retirement.

Ford Stokes: [00:24:50] So far, the rule of one hundred is really important. You want to be safe with your money, but also you want to get income and bonds can generate income, but also as part of a smart, safe strategy, you could replace your bonds with fixed index annuities and you could replace your bonds with that five year strategy that gave you the just generated 12 percent a year for the last three years in a row and compounded interest with a fixed indexed annuity product. That’s a five year fixed indexed annuity product. Also, we’ve already had a beating bank CD segment today. If you’re still invested in bank CDs, I would ask you why? Why are you doing that to yourself and your lifestyle? Go ahead and consider investing in this five year income strategy, the safe investment strategy, the sound investment strategy with this five year fixed indexed annuity. All you’ve got to do is visit ActiveWealth.com and click that set an appointment. But in the upper right corner, also my county link is Kalanithi. It’s c l e n d l y dotcom. Com Ford Stokes. And you can book an appointment directly into my calendar. You can also just send me an email forwarded ActiveWealth.com. I want to get a physical copy of your book Annuity three sixty. Happy to Deborah and her team are happy to send that all to you and you’ll learn about the rule of one hundred.

Ford Stokes: [00:26:13] Your learn about the four percent rule about what you should do. But again, the rule of one hundred is about getting more balanced. But if you can get income, you can generate income. We’re going to play another chapter of my book here in this segment about how you can generate your own personal pension here in just a second. If you follow the rule one hundred and you balance your portfolio, just take 40 or 50 percent of your portfolio invested into a fixed indexed annuity. That’s going to get you growth, but you can generate income off of it. And I’ve got another hint for you. Listening to the radio, I’ll tell you, you can actually invest Roth IRA money into a fixed indexed annuity, too, and you can even implement a Roth later conversion with a fixed indexed annuity as well, that you didn’t know that. But if you’re an activator you’ve been listening to show, you probably did. But this first time you’ve been listening to show or even listening for six months, you didn’t know that you can implement a Roth IRA conversion within a fixed indexed annuity structure. We’re happy to help you do that. And again, all you have to do is visit ActiveWealth.com and click that set an appointment.

Ford Stokes: [00:27:14] But in the upper right corner, we look forward to talking to you. Now, let’s talk about the four percent rule. The four percent rule basically states you’re going to spend no more than four percent of your portfolio each year. And so therefore, you won’t run out of money if you’re spending 10 to 12 percent of your retirement nest egg in the first year or two of your retirement, you’re going to run out of money in 10 or 12 years. But we don’t want you to do that. We want you to only spend four percent of your money each year. So therefore you can count on your money lasting. So therefore you don’t become a financial burden on your kids and you don’t become completely dependent on your Social Security income benefit. Also want to remind you, your Medicare surcharge comes out of your Social Security benefit. They withdraw it from your Social Security income benefit. Many of you are not. Sixty five years old yet. Don’t know that. And we want to make sure that we’re managing. Our cash flow, we want to minimize. All the expenses we have and we want to make sure we don’t have a retirement income gap. We’ll talk about the retirement income gap on next week’s show. But we’ve just talked about the rule one hundred, which basically states, if you subtract your age from one hundred and that gives you the percentage of your portfolio that should be at risk.

Ford Stokes: [00:28:33] And again, if you’re 60 years old, you’ve got 40 percent left over. That means you should only have 40 percent invested into securities. And when the four percent rule, again, that’s the amount of money you might withdraw each year from the starting value of your portfolio of stocks and bonds in retirement, experts consider a four percent withdrawal rate to be safe, as withdrawals should consist of interest and dividends. As we’ve got to do a much better job at managing the risks we’re taking and also managing the withdrawals that we take from our retirement nest egg. And we’re here to help protect and grow your assets because remember, you worked hard to earn that money. It was probably even harder for you to save it. You’ve got so many demands on your money and your income and your time, and we want to do everything we can to help you. I mean, talk about capital for a second. You’ve got a lot of. Human capital and working capital when you’re young, but you don’t have a lot of financial capital. Well, as you get older, you should be able to save and your forehead and your IRA and your capital, your actual money capital will increase, but your human capital will go down because you’re not going to have 40 or 50 years to continue to work.

Ford Stokes: [00:29:47] We’ve got to make sure that you’re not heading back to Wal-Mart, working and stocking shelves later in life and making less money than you did when you worked in the real workforce. We don’t want you to have to go back to work 10 years after you retire as an example. And so we’re trying to do everything we can with the rule. One hundred in the four percent rule to help you. Now, next, Sam is going to talk about he’s going to play the rule of 72, which is Chapter eight and of my new book, Annuity Three. And again, you can get my book, Annuity 360. All you have to do is visit Annuity 360 dot net. And we’re happy to help you with that. All you gotta do is visit Annuity three sixty to get my brand new book, Annuity Three Sixty. Learn all you need to know about annuities, which ones to avoid and which one to buy for a successful retirement. And we’re happy to help you right there. But go ahead, Sam, and play Chapter eight of my new book, Annuity 360, which talks about the rule of 72, which talks about how fast your money is going to double. And we’ll talk about that right after you hear this chapter,

Ford Stokes: [00:30:51] Chapter eight, rule of 72. Big idea. Knowing how long it will take your investments to double is a good planning tool. This will help you track your investments and calculate future earnings. What is it? The rule is a simple way for you to calculate how long your investments will take to double with a fixed annual rate of interest. If you divide 72 by the annual rate of return, you can get an estimate of how many years it will take for the initial investment to duplicate. The rule of 72 is relatively accurate when it comes to low rates of return, but becomes less accurate as rates of return increase. Example, an investment of one dollar annual fixed interest rate equals 10 percent 72 divided by ten equals seven point to an investment of ten dollars with an annual fixed interest rate of 10 percent would approximately take seven point two years to grow to twenty dollars a rule of 72 adjustment. The most realistic simulation for the rule of 72 is an eight percent interest rate. However, you can make a small adjustment to the rule in order to make the calculation even more accurate. For every three points than an interest rate strays from eight percent, you either add or subtract one from seventy two. The adjustment is not necessary. But some people prefer to make this adjustment because the time frame of this version of the rule is more accurate. Example one if your rate is five percent, you would just adjust the rule to be the rule of seventy one. This is because five percent is three points lower than eight percent, which means you subtract one from seventy two.

Ford Stokes: [00:32:27] Example two, if your rate is 11 percent, you would adjust the rule to be the rule of seventy three. This is because eleven percent is three points higher than eight percent, which means you would add one to seventy two other ways to use the rule of seventy two things. With compounded rates, you don’t have to use the rule of seventy two just for invested or loaned money. It can be used for anything that grows at a compounded rate such as population, macroeconomic numbers, charges or loans. For example, the gross domestic product GDP grows at four percent annually. You could expect the economy to double in eight years because seventy two divided by four equals eighteen estimating the effects of investment fees. The rule of seventy two can also be used to estimate the long term effects of fees that eat into your investment. Example one a mutual fund charges six percent in annual expense fees. It will reduce your investment principle by half in about twelve years because seventy two divided by six equals twelve. Example to a borrower pays eight percent interest on a credit card. They will double the amount they owe in nine years because seventy two divided by eight equals nine estimating the effects of inflation. The rule can also be used to find out how long it will take for your money’s value to have due to inflation. Example, inflation is at four percent. The purchasing power of your money will have in eight years because seventy two divided by four equals eighteen.

Ford Stokes: [00:34:02] So if you enjoyed that chapter on rule of seventy two, want to give you a quick hint here. That five year strategy that’s earned twelve percent. If you use the rule of seventy two, your money will double in that strategy in six years if you invest it into a five year strategy and then also roll over into another five year strategy but at twelve percent a year. It will literally double in six years without any market risk. That’s remarkable. If it does what it’s done previously and obviously, you know, past performance, no indicator of future results. But it is remarkable that a safe product with that time to an index that’s linked to an index like a Credit Suisse index has generated 36 percent over the last three years. And those gains and the principle is completely locked in to be withdrawn two years from now and a five year strategy that is remarkable. We come back from the break. We’re going to talk about more safe strategies. We’re going to have time for the smart, safe part of our smart financial plan. This week, we’re going to talk about how you can create your own personal pension. We’re going to have a retirement cost cutter. We’re also going to have an inflation demonstration segment in segment four. You don’t want to miss segment four.

Ford Stokes: [00:35:42] Welcome back to ActiveWealth.com. We’re talking about smart, safe strategies today, we’re talking about how to reduce the volatility within your own portfolio. And we also really focused in on a five year strategy that recently paid out thirty six percent to clients. That’s 12 percent a year. And they were able to lock in their gains after the end of that three year protection period. They locked in their principal and their gains. So if you got one hundred thousand dollars invested, that five year strategy, the first three years, that hundred thousand dollars is worth one hundred and thirty six thousand. And it’s incredible because your money was not at risk in the market whatsoever and didn’t face the downturn during the pandemic. And also what happened a couple of Mondays ago as well. Usually that five year strategy earning 12 percent a year using the rule of 70 to our money is going to double every six years using that strategy. So if you’ve got questions about that, you’d like to double your money every six years and keep it safe with market like gains without your money, be invested in the stock market. I would encourage you to visit ActiveWealth.com click that set an appointment but in the upper right corner and set an appointment directly in my calendar. We’re happy to help you. Next, I want to talk about inflation. Let’s go ahead, Sam, and roll the inflation demonstration sounder.

Producer: [00:37:02] It’s time for an ActiveWealth.com inflation demonstration now.

Ford Stokes: [00:37:10] Treasury Secretary Janet Yellen earlier this month cautioned that prices could continue to rise for several more months, though she expects the recent startling inflation run to ease over time. In a CNBC interview, the cabinet official added that she worries about the problems inflation could pose for lower income families looking to buy homes at a time when real estate values are surging. Consumer Price Index, which measures costs for a wide range of items, increased five point four percent in June, the fastest pace in nearly 13 years. Prices that goods and services producers receive for their products jumped seven point three percent, a record for data going back to 2010. Also, housing prices in the nation’s largest cities climbed nearly 15 percent in most recent measurements from S&P, CoreLogic, Case Shiller. All of that has added up to concern that inflationary pressures could stall the aggressive US economic recovery, with the housing escalation raising fears of a bubble. So I don’t think we’re seeing the same kinds of dangers in this that we saw in the run up to the financial crisis in 2008, Yellen said. It’s a very different phenomenon, but I do worry about affordability and the pressures that higher housing prices will create for families that are first time homebuyers or have less income. What that tells you is you need to stay invested. And one of the best ways to stay invested is to consider a bond replacement and invest in a fixed indexed annuity and also delete the advisory fees and portfolio fees for that portion of your portfolio, because the insurance company, the annuity company, pays us as the advisor. And so as a as a one time commission that we have to monitor and manage that annuity with that client for the life of that annuity. We can also roll that annuity into other products, other financial products and sound financial products or into other annuities and get you a bonus on that money, which we think is a remarkable way to go. Now, let’s give you a retirement cost cutter

Producer: [00:39:14] Ready to save some money. Here’s our retirement cost cutter of the week.

Ford Stokes: [00:39:20] So the retirement cost Cutter don’t want to share with you today is downsizing. Consider downsizing the family home, get the mortgage paid off, make your extra 10, 15 percent. You’ve seen the run up this past year in the Atlanta housing market. Wouldn’t it be great to take your six hundred thousand to a million dollar house, sell that and then move into a smaller home and a 55 plus community where you can hang out with the same type of folks? Wouldn’t it be great if you had the equity that’s in your the old family home generating significant income for you? We can help you do that. And so the cost cutter tip for this week is downsizing. I would encourage you to visit twenty one cost cutters, dotcom, that’s twenty one cost cutters, dot com, and you’ll get my free report right there. Now, the last thing we’re going to do in this smart safe show, we’re talking about smart, safe and sound strategies for investments that kind of coupled with our tactical asset allocation management models with our portfolios is you can create your own personal pension and save. Go ahead and play Chapter nine from my new book, Annuity three Sixty. And if you want my new book, Annuity three sixty two, we have to learn all you need to know about annuities, which ones to avoid and which one to buy for successful retirement. I’d encourage you to visit annuity three sixty dot net. That’s annuity three sixty, not net. Go ahead and say I’m in chapter nine. You can create your own personal pension.

Ford Stokes: [00:40:50] Chapter nine, you can create your own personal pension. Big idea. Using an annuity to create a personal pension helps you create a lifetime income stream, but it also helps you leave a legacy for your beneficiaries. All annuities can create annuity income to supplement the income you need before or during retirement. Those who are approaching retirement are afraid that they will run out of money. But an annuity can help make sure you have income you can never outlive. An annuity can be a great investment for your portfolio, but I encourage you to be careful that you don’t overpay for your annuity. When you put your money into an annuity, the annuity company will pay you your money back at a date. You specify you don’t want an annuity company to charge you too much to simply pay your money back to you. I’m confident that leaving a remarkable family legacy is important to you. You likely want to have money left over when you pass away to leave your beneficiaries. The goal of a personal pension is to generate lifetime income with no risk that grows your money and allows penalty free withdrawals. An annuity can create a lifetime income with market like gains and no market risk, while also allowing you to build enough wealth to leave for your beneficiaries when you pass away. Don’t give the annuity company fees for doing nothing. We prefer fixed indexed. Duties for our clients that do not have an income rider fee, but you can still create a personal pension without an income rider on your annuity. If you get an annuity with an income rider but don’t utilize the features of that income rider, then you are not getting what you paid for.

Ford Stokes: [00:42:26] You are literally just paying the annuity company one to two percent each year. You defer annuities in your annuity without receiving a single benefit for that annual fee. This income rider fee will also draw down your account value or principle. Depending on how that index is performing, the growth on your entire account value could be significantly and negatively impacted. Some accumulation focused annuities are built to deliver increasing payments. Without an income rider, you should consider the features your income rider is providing you before deciding to purchase it. As an add on, make sure you utilize the features you are paying for more ways to get the most out of your annuity. The longer you wait to turn on the annuity, the more you’ll receive in annual payments. This is because your annuity will spend a longer time in the accumulation phase, meaning it will spend more time building up your account value. Your annual payments will grow as your account value grows. Believe it or not, you can generate your own personal pension by distributing no more than five percent a year with penalty free withdrawals from your accumulation based annuity policy. Many accumulation annuities are set up to be armed friendly, so you won’t suffer a penalty when you have to take your armed. It would be silly for you to be penalized for something you are required to do. Annuity companies take this into account by creating products that make taking your R&D easier, inspect what you expect with any annuity.

Ford Stokes: [00:43:49] Don’t just go with what the annuity agent or adviser tells you. Read it for yourself. Specifically, you should read the annuity illustration guaranteed and non guaranteed tables included within the annuity illustration. Also, please remember that annuity policy is a contract between you and the annuity company. So caveat emptor or buyer beware applies here. Be aware of the annuity you are buying and choose an annuity that works best for you that will help you build a successful retirement and they’ll offer you peace of mind whether you choose to generate income through penalty free withdrawals or invest annually in an income rider, know the consequences of both. This is a decision you will make at the beginning of the investment process. One poor decision here can cost you one to one and a half percent of annual growth over a 30 year retirement. This could come out to be a significant loss. Educate yourself on your options and the specifics of each option. You are considering. Making the right decision up front will save you a lot of frustration in the long run. Also, please remember that if you withdraw too much annually, say 10 percent, you will run out of money in ten to twelve years. Make sure that you’re working with an advisor who can help you choose the appropriate withdrawal amount so that your money lasts for your entire lifetime. As discussed above, we recommend no more than five percent be withdrawn each year from your account.

Ford Stokes: [00:45:11] And now for the final countdown. It’s the third down. So let’s recap what you may have missed. It’s the final countdown.

Ford Stokes: [00:45:25] Today show, we thought we gave you a market update where we had GDP was two full points lower than expectations, although the market is up this week we talked about the rule of one hundred and how how much money should be at risk in the market of your retirement nest egg. We talked about the four percent rule. Try not to spend more than four percent of your portfolio each year. We gave you an incredible beating. The bank CDS strategy with a five year strategy only tie your money up for five years. That actually has generated thirty six percent over the last three years or 12 percent a year. Compounded interest growth rate. And all you have to do is visit ActiveWealth.com to get that strategy. Just click that set an appointment, but in the upper right corner and we’re happy to give you a free consult on that. We heard from chapters from my new book, Annuity 360, and you can get that new book, An Annuity 360 Dot Net. We gave you our inflation demonstration with Yellen giving us what she sees on the horizon. And then we gave you the retirement cost cutter with downsizing all this or smart save strategies as part of our smart financial plan. Again, a smart financial plan equals smart save smart risk and smart tax investment strategies, even less the ActiveWealth.com right here on AM 920. The answer. We come back next week. We’re going to talk about retirement income gap and smart risk and smart tax strategies because we’ve handled the smart safe this week. And listen, remember, with your retirement, if you’re going to be a bear, be a grizzly, be aggressive with your hard earned and hard save money. We can’t wait to talk to you next week right here on the active well show on AM Nonintuitive. The answer.

Producer: [00:47:05] Thanks for listening to the ActiveWealth.com. 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 ActiveWealth.com Investment Advisory Services offer to Brookstone Capital Management LLC. Become a registered investment advisor, become an active wealth management, are independent of each other. Insurance products and services are not offered to BCA but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed past performance going to be used as an indicator to determine future results.