Get Smart after Market Volatility Transcript

t after Market Volatility Transcript

Producer: [00:00:30] 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 activities like you want to activate their retirement planning with sound tax efficient investing. And now your host Ford Stokes

Ford Stokes: [00:01:24] Welcome the ActiveWealth.com activators I’m Ford Stokes, your chief financial advisor. And we’ve got our esteemed radio show executive producer. But he’s also what we’ve now dubbed the ambassador to the weekend. Mr. Sam Davis is with us as well. Welcome to the show, Activators. And yes, it is the weekend and it’s not raining finally for once in a while here in Atlanta. And we’re going to enjoy the last bits of summer. That’s it. So I’m all I’m always really enlightened and heartened by. You’re welcoming us to the weekend and thanks for the weather update. We appreciate that. Hey, I know everybody’s got those T times for Saturday and Sunday. I just want to let you know you’re going to be good to go. That’s good stuff. Also, what people not a lot of people realize is that Santa actually does voices for national ads across the country, even for the US Army and and other advertisers. So we’re very fortunate to have you on our show, Sam, and thanks for supporting us. Yeah, happy to be here. That’s it. So on today’s show, we’re going to talk more about a smart financial plan with smart, safe, smart risk and smart tax strategies. And we’re going to go over some really important factors right now and things that you need to be watching, because it’s my goal as a fiduciary to try to take as much risk off the table for you. We want to do everything we can to take care of our activators out there.

Ford Stokes: [00:02:52] And if you’re wondering how an activator is, it’s somebody who is somebody who listens to the show on a weekly basis. It’s someone who wants a successful retirement. It’s somebody who wants a fee efficient, market efficient and even, dare I say, tax efficient retirement is tough to get those these days. On today’s show, we’re going to talk about all the different strategies that make up a smart financial plan. We’re going to do a quick market update. We’ll also have our final countdown, recapping everything today. But I want to kind of start just by giving you a quick market update, and then we’re going to go straight into smart, safe strategies. And we’ll also play a little bit from my new book, Annuity 360. Also, if you’re interested in getting my book, Annuity 360, so you can learn all you need to know about annuities, which ones to avoid, which one to buy for a successful retirement, all you have to do is visit Annuity 360 dot net. That’s Annuity 360 dot net and you’ll get the free download of that. You can also visit bond replacement dotcom. That’s bond replacement dotcom. If you want to get my free report on why it makes sense to replace your bonds with a safe and sound, secure financial product. Listen, we’re fiduciaries, financial advisors. We kind of believe in tactical asset allocation and active wealth management. That’s why the name of my company is active wealth management.

Ford Stokes: [00:04:20] And we also want to do everything that we can to try to take risk off the table and help you maximize the growth of your assets, because always, you know, it’s our goal to protect and grow your money. I always say that, listen, it’s hard to earn the money, but it’s even harder to save it when you’re earning money and you kind of live up to the lifestyle and you’ve got the next thing you want to buy or whether it’s a boat or a renovation on a basement or a trip or paying for kids college or whatever that is. We’ve just got a lot of things going on and a lot of things that require our time and our money. And we take it very seriously. When people come to us and they bring their hard earned wealth, but mainly they’re hard saved wealth, we want to do everything we can to protect and grow that wealth. And so let’s go straight into this market update and then we’re going to talk more about smart, safe investments first and smart risk. And then also the two truly tax free strategies for a smart tax investment strategy as well. You ActiveWealth.com market update. US stock futures were pointing higher Friday, putting the major averages on track for four straight days of gains on a collision course with all time highs. After an incredible tough day on Wall Street on Monday, where we saw, like the S&P 500 lose one point eight, nine percent of its value and then only to see it recover.

Ford Stokes: [00:05:52] And then some of these this rally of four straight days, the Dow Jones Industrial Average futures gained one hundred fifty seven points or point four or five percent, while the S&P futures and NASDAQ 100 futures advanced point for one point three, six percent, respectively. All three of the major averages ended Thursday session with zero point five percent of their respective highs. They were right there. They were just within point five percent of their highs. So in stocks, you know, Intel CEO Pat Guesclin here told The Wall Street Journal that the global chip shortage could stretch into twenty, twenty three. The shortage, which was a result of lockdown’s, aimed at slowing the spread of covid-19. It snarled auto production and caused supply chain dislocations in other industries, including cell phones and consumer electronics in earnings, Dow component American Express Co. reported revenue jumped thirty three percent from a year ago as consumer spending topped PREE pandemic levels. The credit card giant released eight hundred and sixty six million dollars of reserves that had been built up to protect against losses during the pandemic. Twitter exceeded Wall Street estimates on both the top and bottom lines as revenue surged over 74 percent year over year, the fastest since 2014. The number of its monetized daily active users grew eleven percent, snapping beat on earnings and revenue as the number of global daily active users rose to twenty two hundred and ninety three million, up almost five percent for the previous quarter.

Ford Stokes: [00:07:23] The social media company guided for revenue growth of fifty eight to 60 percent in the current quarter, down from the one hundred and sixteen percent annualized growth in the last quarter. The strong results boosted other tech names, including Amazon, Apple Ink and Microsoft Corp.. Next week, Boeing, Facebook, Tesla, UPS, MasterCard and McDonald’s are all among the companies scheduled to report their quarterly earnings results. And in commodities, West Texas Intermediate crude oil fell twenty two cents to seventy one dollars and sixty nine cents a barrel and gold slipped seven dollars and fifty cents to seventeen hundred and ninety seven dollars and 90 cents an ounce. And the overseas markets were mixed with strength in Europe and weakness in Asia. So that’s basically your market update. And we want to talk through kind of what all this means. So if you if you are just growing tired of watching the volatility and seeing your your portfolio lose like almost two percent in a single day, I would encourage you to consider at least replacing a portion of your assets and primarily the bond portion of your assets with a sound financial product that’s got one hundred percent financial reserve requirement. That would be a bond replacement strategy that would replace basically the the bonds your portfolio with fixed index annuities and. Let’s just take and again, this is part of our Smart Financial Plan segment here in which we’re trying for this whole show, we’re trying to talk about a smart financial plan and how to truly build a smart financial plan.

Ford Stokes: [00:09:05] And in our examples, we’re going to use basically a million dollar portfolio. So if you’ve got a million dollar portfolio, the typical million dollar portfolio, it kind of started in, you know, with a 60 40 structure started in nineteen fifty two with Harry Markowitz getting credit for being the founder of Modern Portfolio Theory, although other people used it before he was using to non correlated assets on the same market exchange, which is basically stocks and bonds. And if you got 60 percent stocks and 40 percent bonds, that’s a good portfolio that’s going to protect against some downside risk. But there’s been a lot more volatility with bonds, especially in our slightly rising interest rate environment. And you’re also likely paying between one and one and a half percent on an advisory fees on the bonds that you have. So you’re paying like six thousand dollars a year just on the bonds portion. If you replace those bonds, the fixed index annuities, you would literally delete or eliminate two hundred ten thousand dollars of advisory fees over thirty five year retirements that you’re 60 years old between now. If you’re six years old, between now and when you turn ninety five, you’re going to save at least two hundred ten thousand dollars just in simple math. And the average rate of return of the fixed index annuity is especially if you were invested in some of the ones that we represent, you’re looking at an average rate of return of about six point nine four percent based on 20 20 levels.

Ford Stokes: [00:10:32] And the average rate of return of the bond of the Moodies via bond index was just three point two percent in twenty twenty. If you look at that over a thirty five year period, the performance growth difference is two point eight five four percent. That is a significant difference. And there’s never been I’ve never seen any type of model out there that says that the bonds outperform fixed index annuities. Now, obviously, we’ve seen lots where the stock portfolios, 100 percent stock portfolios can outperform fixed index annuities. But you have risk associated. But why would you take one hundred percent financial reserve product where the US government, the state requires that the annuity companies preserve one hundred percent of the money, give them into safe financial products like the 10 year US Treasury, and then they take the interest off of those and invest those into options. And in indexes like the S&P five hundred, the Barclays Atlas five or the Credit Suisse Raven Pack. And those are actively managed strategies. The S&P is a passive strategy, but it follows the top Standard Poor’s 500 companies. You’re just doing a much better spot and you’re going to end up having two point eight five four million dollars more. If you if you started with a million dollar portfolio of four hundred thousand dollar, portion of that portfolio was in bonds and you put those into a fixed index instead.

Ford Stokes: [00:11:55] That’s a remarkable result. And when we come back from the break, we’re going to play a chart for my new book about bond replacement. You can learn more about bond replacement and specifically some of the risks you’re going to avoid. And we’re going hear more about that right when we come back. We’re talking about smart financial plan with smart, safe, smart risk and smart tax strategies to build a successful retirement. You’ll stay active. Well, show right here on AM 920. The answer. And welcome back, Activators, the ActiveWealth.com show, and we’re talking about how to build a smart financial plan that includes smart, safe, smart risk and smart tax strategies, that equally smart financial plan and hopefully a less volatile, more peace of mind and more successful retirement because we want to help protect and greater wealth. So Sam’s right to play Chapter 15 for my new book, Annuity 360. And if you want a free copy of my book, go ahead and visit a annuity 360 dot net. That’s Annuity 360 dot net and save. Go ahead and play Chapter 15 about bond replacement. We’ll talk about that and we’ll start talking about what it means to start implementing smart risk strategies as well. In this segment, right after Sam plays Chapter 15 about bond replacement and how that can benefit your portfolio.

Producer: [00:13:30] Chapter 15, bond replacement with fixed indexed annuities. Big idea. Historically, bonds have seen volatility when the market is volatile. Fixed index annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial adviser talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. At my firm ActiveWealth.com Management, we believe this is a smart way to protect your future. Many people have learned that bonds are a safe way to invest your money. But there are some downsides to bonds that should make you think twice. We’ll talk about some reasons why you should consider replacing your bonds with annuities. First, here’s some information on the history of bonds in the United States. Historical bond volatility. The 1900 saw two secular bear and bull markets in U.S. fixed income inflation peaked at the end of World War One and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The U.S. government kept bond yields artificially low until 1951. The long term bond yields were at one point nine percent. In nineteen fifty one, they climbed to nearly 15 percent in 1981. In the 1970s, globalization had a huge impact on bond markets. New asset classes such as inflation, protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created early.

Producer: [00:15:00] Investors in these new asset classes were compensated for taking on the challenge. The bond market was coming off its greatest bull market coming into the 21st century. Long term bond yields declined from a high of fifteen percent to seven percent by the end of the century. The bull market in bonds showed continued strength in the early 21st century. But there is no guarantee with our current market volatility that this will hold see chart fifteen point one to see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history alone, you can see how uncertain the future of bonds is. Inflation and fluctuating interest rates play a big role in bond yields. Interest rate risk of bonds, bonds and interest rates have an inverse relationship. When interest rates fall, bond prices rise. Due to the covid-19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option. However, this has caused bond yields to fall to all time lows as of May 24th. 2020, the ten year Treasury note was yielding point six four percent and the 30 year Treasury bond was at one point to seven percent.

Producer: [00:16:22] Reinvestment risk of bonds. This is the likelihood that investments cash flows will earn less and a new security. For example, an investor buys a ten year one hundred thousand dollar Treasury note with an interest rate of six percent. They expect it to earn six thousand dollars a year. At the end of the term, interest rates are four percent. If the investor buys another 10 year note, they will earn four thousand instead of six thousand annually. Consider the possibility that interest rates change over time when deciding to invest in bonds systematic market risk. This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpredictable and it is impossible to avoid diversification cannot fix this issue, but the correct asset allocation strategy can make a big difference. Unsystematic market risk. This type of risk is unique to a specific company or industry similar to systematic market risk. It is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes. Coming to the industry, however, there is no way they can know how those changes will affect the market, there are two factors that contribute to company specific risk business risk.

Producer: [00:17:45] There are two types of risk, internal and external. Internal refers to operational efficiency and external would be similar to the FDA banning a specific drug that the company sells financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading reduced advisory fees. Investors who trade individual stocks may know how much commission they are paying their broker, but individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds they sell called markups, but they bundle them into the price that is quoted to the investors. This means you are unaware of how much commission you are actually paying. Standard and Poor’s estimates of bond markups is zero point eight five percent of the value for corporate bonds and one point two one percent for municipal bonds. However, markups can be as high as five percent, up to fifty dollars per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time. Unlike an annuity which provides income for life. You must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss. As we discussed above, annuities will provide you with an income you can never outlive.

Ford Stokes: [00:19:08] I’ve enjoyed listening to Chapter 15. Bond, replaced with fixed indexed annuities fixed in exchanges are not subject to the same volatility, which makes them a much safer investment. And we learned about the different types of bond risk out there with reinvestment risk and interest rate risk and systematic and unsystematic market risk and how to reduce advisory fees, and also how bonds have finite durations as well, whereas a fixed indexed annuity doesn’t. Why are you paying advisory fees and why are you continuing to invest in bonds? Why don’t you just invest in stocks and fix the sexuality’s instead and also eliminate any bank CDs as well? By investing in a fixed index annuity with the money, the safe sound money that you would have invested, so I would encourage you to consider investing in a bond replacement strategy. And if you want more information about that, you can just visit bond replacement dotcom. Again, bond replacement dotcom is my pre-report. You can get the immediate download just by putting your information in. Just visit bond replacement. Also, if you want to book a free financial consultation with me directly with me, you won’t talk to a downline adviser. All you have to do is pick up the phone to give us a call at (770) 685-1777. And Miss Deborah will be ready to take your call.

Ford Stokes: [00:20:36] And all you’ve got to do is just call (770) 685-1777 or visit ActiveWealth.com and click. That set an appointment, but in the upper right corner, that’s ActiveWealth.com. We’ve been talking about building a smart financial plan. We just talked about smart, safe and smart savers. There’s really three investment options out there, primarily investment options out there. No one is not in the market. We’ve got growth, the safety market upside, limited downside. Your principal and gains are protected. There’s a low cost, you know, zero to one percent annual fee. Generally, we’re the ones we deal with the fixed index, we deal with it. It’s zero percent the time horizon, these products that we deal with between seven and 14 years and you can potentially earn between five and seven, even as high as nine point eight four percent per year. And if you want to know which fixed index annuity that is, all you have to do is give us a call at (770) 685-1777. We’re happy to give you a free retirement income plan at no cost to you. And then you’ve also got options for guaranteed income. That’s a fixed index. And that’s the number one option is not in the market. Number two option is in the market passive, which is a lot like your phone.

Ford Stokes: [00:21:52] It’s with passive investing. You’re going to capture one hundred percent of the market gains and one hundred percent of the market losses because you’re just going to hang in there. Right. And you’re going to be asked to just hang in there by your broker or your advisor. And we think that hope is not a strategy. You need to take more of an active role with your investments and inspect what you expect and get an idea and rebalance things on a monthly basis, at least the time horizon. In the marketplace, investing is like 10 to 30 years. And in twenty eight, passive investors would have lost about thirty eight percent and in 2009 they would have come back twenty six percent. But if you had a million dollar portfolio, again, we’re talking about that same example of a million dollar portfolio sitting in your IRA, you would have lost two hundred thirty seven thousand five hundred dollars. That’s a significant loss. And you will add seven or sixty two thousand five hundred dollars left over. For many people, that’s a lifestyle change. And then option three of the primary. Three ways that people invest is in the market tactical, where our goal is to capture 70 percent of the market gains for only, but only 40 percent of the market losses.

Ford Stokes: [00:23:02] That’s our goal. It’s usually an advisory fee between one and one and a half percent. The time horizon is six to eight years. You go in and implement tactical asset allocation for just six to eight weeks as an example. And in twenty eight you would have only lost sixteen percent in twenty eight, but you would only come back eighteen point two percent, but you would have only lost over that two year period. You and I lost over just right around thirty seven thousand two hundred twenty five dollars versus losing two hundred thirty seven thousand. So you would have, you’d have nine hundred sixty two thousand seven seventy five left over versus having seven sixty two five. That’s the number three investment option, the primary investment option, which is in the market tactical. So we feel like a best combination is between smart, safe, with not in the market investing and smart risk, which is in the market tactical. That’s what we like to do. And when we come back from the break, we’re going to talk more about how to invest with tactical asset allocation. We’re also going to talk about smart tax strategies, the only two types of tax free investments out there, which is Roth IRAs and life insurance, where I talk about how to implement both of those strategies in segment three and four, it was the ActiveWealth.com writer and I am not sure of the answer.

Ford Stokes: [00:24:23] And we look forward to talking more about how to build a smart financial plan with next Smart Risk and Smart Tax Act. Well, show right here on AM. Not the answer. Welcome back, Activators A.M. Show, and we’re talking about how to build a smart financial plan that includes smart, safe, smart risk and smart tax strategies, we’ve kind of gone through a lot of the smart, safe strategies with doing a bond replacement, with investing in fixed index annuities. And then we’ve also talked about smart risk with implementing a tactical asset allocation management strategy to manage your wealth with something that rebalances at least on a monthly basis and not just hanging in there. And then I want to talk about beating banks CDs, because with the with the volatility that we saw on Monday, earlier this week, where the S&P 500 lost like one point eight, nine percent in a single day, I want to make sure and obviously we’ve had a rally the next of the last four days this week to come back even harder and stronger. But I want to make sure. Are many of you are thinking about well, maybe I just need to put my park my money in bank CDs, I want you to consider two options

Producer: [00:25:54] Need a higher rate of return from your safe. Money is

Ford Stokes: [00:25:58] Enough.

Producer: [00:25:58] It’s time to beat the bank CD rates.

Ford Stokes: [00:26:01] Number one is we want to consider a multiyear guaranteed annuity, which would be a MYGA. And we’ve got a three year MYGA that’s paying three point one five percent. We’ve got a two year MYGA that’s paying two point four percent, and we have a one year MYGA that’s paying two point one five percent compared to basically at MYGA thing is offering a point six percent, two point six of one percent interest a year on a one year Bankside and that’s way below inflation. You’re going to lose buying power. It’s a melting ice cube situation, but also one of the ways to beat bank CDs is hold back the money you’re going to need for the next year and then invest the rest of it into a fixed index annuity where you’ve got to defer your money for a year and then you can start taking up to five plus percent penalty free withdrawals and it goes up point one or point two percent a year. And the percentage payouts. And also, they can get you. Interest rates between five and nine point eighty four percent, and if you want to learn how you could get an annuity that based on recent history, has generated that type of interest growth for our clients, I would encourage you to just go ahead and pick the phone up and call us at (770) 685-1777.

Ford Stokes: [00:27:34] Or visit ActiveWealth.com and click. That set an appointment, but in the upper right corner, here’s a couple of numbers for you. The total U.S. population is right around three hundred thirty one million, according to the census. Obviously, we’ve got also illegal folks who live here beyond that number, the workforce right around one hundred and fifty million people and the full time workers are one hundred and twenty six million folks. We’ll have one hundred twenty six million people who are working full time to paying taxes and trying to pay down all this debt and pay for Social Security and pay for Medicare, because that’s who’s paying for the folks who need Medicare and paying for the baby boomers. We’re at twenty eight point five five four trillion dollars of US national debt. We’re truly a debtor nation. If you go to us, Decalogue, don’t just take my word for it. Check out US debt clock, dawg, and it will show you the problems that we have. And let me just ask you, do you think taxes are going to go up in the future? Well, if you listen to the Biden administration, they’re going to go up in the very near future. Not a fan of the Biden administration. I am a fan of our former president and I also am a fan of conservative fiscal management of our tax dollars.

Ford Stokes: [00:28:52] And we’re not getting any of that right now. And I just think is a huge opportunity to reduce the tax risk in your portfolio. And as a fiduciary, it’s my responsibility to help you reduce all risk, whether it’s market risk or reinvestment risk or tax risk, et cetera. And we’ve got to do everything we can to reduce tax risk and also market risk in your portfolio. And there’s two types of tax free investments out there. There’s life insurance and Roth IRAs. And I would encourage you to consider implementing a raw Vlada conversion to save six figures on your retirement. We’ve talked about several of my clients. We don’t name names here, but I’ve got one client. We have his name is Chris, and he’s got about one point one million dollars. And he’s single. He’s got one child. He’s divorced, actually. He’s got one one one million almost always in, it’s for OK, he’s got he’s been working with the same company for 40 years and he’s six years old and he’s going to retire at the end of this year. But he’s going to take basically. One hundred thousand dollars a year. And convert his Roth conversion over the next 12 years, going to do everything you can to convert as much as you can, but because his money is growing at a significant clip, it’s tough for him to eat into all the principle.

Ford Stokes: [00:30:26] But he will at least place, you know, one point two million dollars into his into his Roth anyway. At one point, one million is in his for OK right now. But if you’re talking growth over the next 10 years and the average is around close to 10 percent, you’re looking at one hundred and twenty or a hundred and twelve or one hundred and ten grand a year in growth. And so he’s not he’s not able to convert as much, but he is able to at least implement a Roth conversion where he’s got money that can go to his child. But he’s going to end up saving $487,000 over his 35 year retirement, 6 years old, and say we’re having him live at least the age ninety five. And that’s a remarkable tax savings. But also his child is going to inherit a Roth IRA where the IRS is not a partner in that account. And he’s still going to have an IRA that’s going to have that kind of money in it. But at least he’s converted a lot of it. It would be easier if he was married. We’ve talked about that and he’s kind of set in his ways.

Ford Stokes: [00:31:35] He likes to hunt and fish and all that stuff. But married filing jointly, he could be moving two hundred two hundred fifty thousand over because the married filing jointly tax bracket at twenty four percent bracket ends at three. Twenty eight. Nine hundred. Right. So I would encourage you to consider a Roth ladder conversion as a means of getting more tax efficient and to try to kick the IRS out of being your partner in retirement. The other is the other only time a truly tax free investment is life insurance. I’ve got a client who works for a major manufacturer here in Atlanta, and he’s putting in he’s doing a temp. He’s putting in two thousand dollars a month for ten years. Well, after he does that, he’s 55. When he retires at age sixty five, he’s going to be able to take out, according the illustration, twenty five thousand six hundred two dollars based on previous performance of the indexes that he’s tied to because he’s invested in index universal life policy. And the income he’s generating are loans against the policy later that are tax free because there’s no taxes on loans, no income taxes on loans. And it is completely legal and it’s part of the IRS code. Seventy seven or two, it’s called a rule seven. Seventy seven to plan. And if you want an example of how you can generate tax free retirement income that you can never outlive, all you got to do is just visit ActiveWealth.com and click that set an appointment button in the upper right corner.

Ford Stokes: [00:33:10] That’s ActiveWealth.com. And we’re happy to help you. You can also send an email to Ford, I would really like to get a tax free income plan, if I could, tax free retirement income plan if I could. All you got to do is just send me an email to Ford@ActiveWealth.com. It’s Ford, like the truck, @ActiveWealth.com. And this has kind of been that smart tax part of it. We want to make sure we. Convert over time using a Rothblatt or conversion a little bit each year so we can stay at that twenty four percent. Tax bracket, also, one of the hints that I’m going to give you right now is. You want to use your taxable account, let’s say you’ve got an investment account of a couple hundred grand or one hundred grand and you’re converting money from your IRA into your Roth IRA. Why don’t you use them the taxable investment money that’s in your investment or your brokerage account? And use that money to liquidate that money. Withdraw that money and use that money to pay the taxes on the conversion so that one hundred percent of your money that moves from your IRA into your Roth IRA is from tax deferred to completely tax free dollars.

Ford Stokes: [00:34:24] And all you have to do is wait five years from the time you open the Roth IRA account to access the principal and the gains. Absolutely tax free or you’ve got to wait five years on any Roth conversion. And when people fill out a Roth conversion form, for me, they classify that one hundred or two hundred grand or one hundred fifty thousand. They’re moving. With our custodian, TD Ameritrade, and there’s a five year clock put on each one of those conversions, but once that’s done, you can access that money tax free. The IRS is no longer part of retirement. And you’re also there’s no R&D. When we come back, we’re going to play two important chapters from my book, Annuity three sixty one point Chapter 16, reducing risk in your portfolio with annuities. And we’re also going to let you know that you can’t actually buy an annuity with your Roth IRA account with Chapter 17 for my new book, Annuity three Sixty. Come right back and we’re going to talk about how you can reduce risk with fixed index annuities within your portfolio. And then also, we’re going to talk about how you can actually reduce tax risk by buying an annuity and still implementing a Roth IRA conversion within that annuity.

Ford Stokes: [00:35:36] Believe it or not, you really can do it. Does the ActiveWealth.com show right here on AM nine 20. The answer? And. Biden on today’s show, we’ve been talking about how to build a smart financial plan that includes smart, safe, smart risk and smart tax strategies, and if you want to know how you can get your free financial plan, your free, smart financial plan from us here at ActiveWealth.com and all you’ve got to do is visit ActiveWealth.com and click that set an appointment. But in the upper right corner, that’s ActiveWealth.com. And we’re going to play two chapters here from our new book, A.C. 360. And you can visit Annuity 360 Dot Net to get my free book. But Chapter 16 talks about how you can reduce risk in your portfolio with annuities. And Chapter 17 talks about how you can implement a Roth later conversion within an annuity or how you can buy a fixed next annuity with Roth IRA dollars. More and more annuity companies are accommodating this. So I would encourage you to consider investing just a portion of your portfolio into a fixed indexed annuity just to replace the bonds in your portfolio, delayed part of the advisory fees you’re paying and get greater growth and greater protection on your money. So let’s go ahead and play those two chapters, Sam. And we come back, we’re going to have a final countdown.

Producer: [00:37:23] Chapter 16, reduce risk in your portfolio with annuities. Big idea. An annuity can protect against several risks that can affect retirees and pre-retirees and offer a better financial safety net than other investment types. One of the biggest benefits of investing in annuities is reducing risk in your portfolio. With current market volatility, pre-retirees and retirees are more concerned than ever about their retirement funds and protecting their hard earned well. We believe that annuities can be the answer to risks in your portfolio. Longevity risk. Retirees and retirees are concerned about outliving their wealth. We have offered some strategies in this book that will stretch your retirement funds, such as following the four percent rule. But annuities can offer even more protection against this fear. We are living longer, so it is important to plan for at least three decades of retirement. An annuity can help create an income you can never outlive. Your money will last for your entire retirement by utilizing monthly, quarterly or yearly distributions from your annuity account. After your money grows during the accumulation phase, market risk fixed indexed annuities can protect you from market risk. These annuities are not actually invested in the market. They’re only tied to a specific market index. This means that you enjoy all the benefits of your market index when it performs well, but you are not exposed to any of the market risks. Should your index perform poorly, you will either make money or remain flat. You will never lose any money.

Producer: [00:38:58] Zero is your hero. Inflation risk annuities can offer riders that can help you adjust for inflation, even though a rider might reduce your payout. Protecting yourself from inflation will ensure that your money lasts and is not exposed to any unnecessary risk. It is important to have an annuity with a payout linked to the Consumer Price Index, or CPI, instead of one that increases at a fixed rate each year to ensure you are protected against inflation risk an annuity. The increases at a flat rate each year does not offer sufficient protection against inflation sequence of return risk. An annuity with a lifetime withdrawal benefit can counteract the effects of a down market at the start of your retirement. Research conducted by Retire one has shown that you can flip fifteen years of returns from retiring during a recession to retiring during a market that is up and completely change your retirement outlook. The positive returns would offset your withdrawals and grow your assets before your account felt the effects of a negative return. Consider a smart, safe plan with a smart, safe plan. Your money is invested not in the market. The characteristics of investing, not in the market, include growth with safety market upside limited to no downside principal and gains protection. Low cost zero to one percent annual fee time horizon of seven to 14 years can earn five to seven percent annually. Options are available for guaranteed income. Here’s some examples of not in the market investing bank CDs.

Producer: [00:40:33] The annual percentage yield API is about one to two percent. Your time horizon is typically one to three years and you cannot access the funds until the contract is up. Treasuries, the API is about three percent. Your time horizon is ten years and you cannot access the funds until the ten years is up. Fixed annuities, the annual percentage yield is between three and four percent. Your time horizon is typically four to seven years. You are able to access the funds during the contract period multi-year. Guaranteed annuities or MYGAs, you get between two and four percent growth on your principal, depending on the duration of your policy. This is less growth than a fixed indexed annuity, but it is guaranteed the annuity company is required to pay you the rate they promised for the duration of your policy. Fixed indexed annuities, you receive between five and seven percent growth on your principal. The time horizon is seven to 14 years and you do have access to the funds in your account if you need them. A smart, safe plan does not invest your money directly in the market. Your investment is tied to an index without being invested directly in it. This means that you get a portion of the market gains without the market risk. You may want to consider investing in a fixed index annuity over other not in the market options. If you invest in treasuries or CDs, you will lose ground in your investment due to inflation.

Producer: [00:41:59] Investing in a fixed index annuity will likely cut down on your inflation risk. We prefer accumulation of annuities because they minimize your risk in several areas and they lock in your gains for the use of point to point protection periods, meaning you won’t lose money. Chapter 17, you can buy an annuity with your Roth IRA account, big idea. Many people don’t know this, but there are at least five annuity carriers who allow you to invest your Roth IRA account into a fixed indexed annuity. And many others are beginning to follow suit. A Roth IRA is an individual retirement account IRA under United States law that is generally not taxed upon distribution, provided certain conditions are met. The principal difference between Roth IRAs and most other tax advantage retirement plans like IRAs, four one KS for three B’s, 450 CEPA, etc. is that contributions into the Roth IRA are invested with after tax dollars and qualify withdrawals from the Roth IRA plan are tax free and growth within the account is also tax free. The Roth IRA was introduced as part of the Taxpayer Relief Act of 1997 and is named for Senator William Roth, who introduced and sponsored the legislation. This may surprise you, but you can actually invest your Roth IRA account into a fixed indexed annuity as of the printing of this book. There are five annuity carriers that will eagerly accept a full Roth IRA conversion from your IRA.

Producer: [00:43:30] There are only three annuity carriers that can handle partial conversions, but more carriers are adjusting their business operations and illustration software to accommodate Roth IRA investments into their annuity products. The largest annuity care in the United States allows for Roth IRA investment into their annuities. They allow Roth IRAs in all of their current fixed indexed annuities, full and partial, with some parameters, including number one. Roth conversions will create new policy numbers so they will show in separate accounts. But this does not change any product feature or the surrender schedule. With the annuity product number two, conversions must be at least some product minimum premium between 10000 and 20000 each. Therefore, you cannot implement a Roth conversion that is less than 10 to 20 thousand dollars depending on the annuity product. The title of my next book is Taxes are on Sale. I will cover all the aspects of Roth IRAs, Roth IRA conversions and why now may be the best time to kick the IRS out of your retirement account with a Roth IRA conversion. I believe that taxes will likely increase in the future. So strategic Roth latter conversion will help reduce your future tax risk and save you six figures in taxes paid during your 30 plus year retirement. Please do not let your current Roth IRA account or your desire to convert your IRA to a Roth IRA impede you from investing into a fixed indexed annuity

Ford Stokes: [00:45:01] And now have the final countdown. It’s the first. Down, down. So let’s recap what you may have missed. It’s the final

Ford Stokes: [00:45:11] Countdown. Well, I look forward to the final countdown and we talk about building a smart financial plan with smart, safe strategies, with a bond replacement by replacing our bonds within our portfolio and investing in a one hundred percent financial reserve product in a fixed index annuity. And we’ve got some fixed notes that are paying between five and nine point eighty four percent. And if you want to know how to get a potential nine point eight four percent growth on your money, average annual rate of return on your money, all you’ve got to do is reach out to us at ActiveWealth.com. Click that set an appointment, but in the upper right corner and we’re happy to get scheduled with you. And then also, you can call our office at (770) 685-1777. We also talked about smart risk strategies with tactical asset allocation and not just hanging in there with our investments and rebalancing every month and not riding the lowest, the lows. We talked about what happened in 2008 and 2009, difference between in the market, passive investors and in the market tactical investors and which one did better.

Ford Stokes: [00:46:18] And here is in the market, tactical investors did much better. And then we’re also talking about smart tax strategies with Roth IRA conversions investing in a Roth IRAs, contribute to a Roth IRAs and also potentially investing into an index universal life policy. And that would allow for tax free retirement income or also for college planning. And we also talked about how to beat bank CDs on this week’s show. And we play three chapters of my new book, Annuity 360, and you can get a free copy of that at Annuity 360 Dot Net. We look forward to talk to you more next week about tax smart investing activators. We hope you all have a great week. Remember, if you’re going to be a bear, be a grizzly about your retirement future. Be aggressive about managing your portfolio. Be aggressive about inspecting what you expect because it is your money. It is your hard earned wealth. It is also your hard save wealth. And we want to work hard to protect and grow your hard earned and hard to save wealth. And we hope you all have a great week.

Producer: [00:47:30] 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 through Brookstone Capital Management LLC.Com, a registered investment advisor. Bcm, an act of wealth management, are independent of each other. Insurance products and services do not offer to speak of it, 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.