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CDs, Mutual Funds, Annuities vs. Secondary Annuities (Part 7)

Posted on: March 24, 2017 at 5:10 am, in

Reviewing Certificate of Deposits, Mutual Funds, Stocks, Annuties and Secondary Annuities for Retirement Planning

Pros & Cons of CDs, Mutual Funds, Annuities and Secondary Annuities

We all would love to buy new cars. We love the smell and the feeling of accomplishment when we buy a car new off the lot, but for the more financial minded individual a new car is not the best option. Why? As soon as a new car leaves the lot, the value drops by over 10%. Losing 10% in a deal doesn’t make good business sense. The savvy car buyer scours the internet looking for the car they want with very low miles. They let the first purchaser take the depreciation and they get the car at a discount. What does this have to do with retirement?
Learn more with a presentation here: structured_settlements.pdf
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Some retirement products are like buying new cars. What’s a new retirement product?

CD (Certificate of Deposits): Retirement Investment Option

Here are three of them: first, you have bank who wants to sell you a CD. The CD is like the compact car of the group. The CD is not meant to hold a lot of retirement funds and certainly isn’t fun to own. The rates are terrible, below 1%, but CDs are reliable and will pay the same amount throughout their lives.

Mutual Funds & Stocks: Retirement Investment Option

Another new retirement product is mutual funds and stocks. Mutual funds and stocks are like the sports cars of the group. They grow fast, slow, then fast and can cause an awful accident injuring your retirement account. 2008 saw a lot of mutual fund and stock pileups on the highway to retirement. Sure, over the extra-long hall these funds always grow, but with retirement looming, most don’t want to take a hit after they are done working.

Annuity: Retirement Investment Option

With a large chunk of money, a new off-the-lot retirement product is an annuity. An annuity is like an expensive luxury car. The annuity costs a lot of money, but it’s safe, reliable and comfortable for the long haul. There are no changes in the amount annuities pay out, but they only pay out 1-2% these days. They will continue to pay out this 1-2% until the predetermined time period is up. Pay a lot at the beginning and relax in comfort and watch the small trickle of money come in. These are the big “off the lot” depreciators of the group.

Secondary Annuities: Retirement Investment Option

Secondary annuities are pre-owned annuities. They have been owned by someone else who won the lottery, a lawsuit or a settlement. Secondary annuities are assigned by a court and backed by large reliable insurance companies. The certified pre-owned low mileage luxury sports car of the group. They can be fun to own as there are a myriad of different ones with different payouts and prices and time limits. All kinds of accessories are available: lump sum payouts, monthly payouts, yearly payouts and combinations of all of the above. Secondary annuities are also reliable because they are backed by insurance companies, certified by a court and they won’t change. Whatever payout you purchased is what you are guaranteed to receive.
To get back to the car analogy, the first person that owned the annuity took the big depreciation. Now they want to get the cash for their annuity. They have to sell their rights to all of the future payouts at a discount so that they can get that lump sum of money. To do that, they have to sell it at a used car discount price. That discount price is passed on to the secondary buyer.

How much of a discounted price? Well, secondary annuities can pay out the equivalent of 5-10% interest. That sure beats the CDs and the brand new annuities. The secondary annuity luxury sports retirement investment may even beat the mutual funds and stocks in any given year, with one exception: secondary annuities won’t break down.
Year after year, you’ll get what you paid for backed by the insurance company and the courts. That’s like having all maintenance paid for throughout the life of the annuity. Hey, even if one owns a sports car or two, they usually have a more comfortable and reliable car to get them around town. The secondary annuity will get you to and through retirement with a great rate, reliably and consistently. Sometimes a new-to-you car makes the most financial sense. With retirement, the new-to-you annuity offers the best of all makes, models and styles.
Read Part 1: Tired of the 1.9% the Bank Pays You on Your Certificate of Deposit (CD)?
Learn more with a presentation here: structured_settlements.pdf
Show me real secondary market deals available right now

Better than a CD – Secondary Annuities for Retirement (Part 6)

Posted on: March 24, 2017 at 5:10 am, in

Recent history suggests that the tried and true retirement tools are still being tried, but aren’t so true. The traditional way of saving for retirement may not be the best way anymore. Take, for example, Bob and Marge who retired in 2005. Bob and Marge saved up their entire life so that they could move to Florida and enjoy the fun and sun. They put most of their money into mutual funds and when they had a sizable amount, they sold their house and moved to sunny Florida.
Learn more with a presentation here: structured_settlements.pdf
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Every month, Bob and Marge received a good amount of returns on their investments. They had plenty to pay their new mortgage, taxes, entertainment costs and for activities of daily living. Marge and Bob were living the highlife. Then 2008 rolled around and the market crashed. Stocks lost their value. They were getting more than 20% less from their investments than before. They could no longer afford the beach front condo they had moved into and they couldn’t afford to sell it because the bottom fell out of Florida property values. They were broke and under water. The bills began to pile up and their stress level eventually threatened to ruin their retirement. Bob and Marge wondered if they could have done something differently. What could have they done differently?
Well, if Bob and Marge chose an investment strategy that was stable, then they could have continued to enjoy their retirement. Most people retire around 65 and may live for 20 or 30 more years. No one can predict what the stock market is going to do 20 years from now. So why have the majority of your retirement in something that no one can predict. Chances are, sometime during that 20 to 30 years, the market is going to do something that will hurt retirement funds. CD’s would be a safe alternative, but they have a lousy return and it is hard to retire on a lousy return. So the popular choices are the volatility of the stock market, CDs or savings accounts (which have a worse return than CDs. A safe investment with a good return is hard to come by these days. Bob and Marge should have looked outside of the box to a safe investment with a better return.

Secondary annuities could have helped Bob and Marge enjoy their retirements far into the future.

Yes, secondary annuities could have helped Bob and Marge, but why and how? The reason is that secondary annuities are guaranteed. When you purchase a secondary annuity, you know exactly what you are getting and when you are getting it whether the purchased annuity promises monthly payouts of $400 or a lump sum payout of $400,000. Unlike the 401k which is pegged to the stock market coupled with the mistaken belief that the market will always increase, the secondary annuity is fixed. Whatever the payouts were that you purchased will still be the payouts no matter what happens to the stock market, the price of oil or pig futures.
Not only do you know what you are getting, the payments are guaranteed. The payments are guaranteed by highly rated insurance companies and they are often guaranteed by the state in which the structured settlement began. These secondary annuity payments are secured by a huge insurance company that is probably owned by another huge company. The security of secondary annuities can be compared to that of a large banking institution. Unlike their 401k, Bob and Marge would certainly know how much, when and that they would be getting paid, guaranteed.
So, secondary annuities are safe, but what about the rates? The current equivalent rates of return on secondary annuities beat out CDs by a mile and often beat current stock market/mutual fund returns without the risk. A secondary annuity gets the equivalent of a 5-10% return. A bank isn’t going to come close to that rate. Also, there are many different types and schedules of payouts of secondary annuities so there are always choices that fit each person’s retirement plan.
Relying solely on volatile investments for retirement doesn’t make sense. Risking a portion of retirement may make sense, but the best bet is to find something, like secondary annuities, that are guaranteed and still pay out at a great rate. The savvy investor doesn’t have to worry about the market at all, because they put their money in a secondary annuity and enjoy the income and their retirement without stress and worry.