How to Start Building Your Retirement Plan

February 26, 2022 00:47:51
How to Start Building Your Retirement Plan
Retirement Results
How to Start Building Your Retirement Plan

Feb 26 2022 | 00:47:51

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Show Notes

On this week’s show, Ford answers some questions from Activators before detailing how you can get started on your retirement plan today.
Activators, if you’d like to get more information you can call us at (770) 685-1777 or go to www.ActiveWealthShow.com and set an appointment. We will give you a free portfolio analysis and a free financial plan to your 95th birthday. We’ll see you next week on the Active Wealth Show!

Schedule a conversation with Ford now: ActiveWealth.com
Watch more episodes: www.ActiveWealthShow.com/podcast
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Active Wealth Show How to Start Building Your Retirement Plan: Audio automatically transcribed by Sonix

Active Wealth Show How to Start Building Your Retirement Plan: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer Sam Davis:
Registered investment advisors and investment adviser representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosure of any conflicts of interest, if any exist. Please refer to our firm brochure. The ADV to a Page four for additional information.

Producer:
Welcome to the Active Wealth show with your host! Ford Stokes Ford is a fiduciary and licensed financial advisor who places your needs first. He’ll help you protect and grow your wealth. The Active Wealth Show 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:
And welcome to the Active Wealth Show activators I’m Ford Stokes for Chief Financial Advisor, and I’m joined by Sam Davis, our executive producer. Sam, welcome the folks.

Producer Sam Davis:
Welcome to the weekend activators. It’s almost spring here in Atlanta, Georgia. We’re so glad you’ve tuned in today and be sure you stay tuned. We’ve got a lot of important things to talk about. Dare I say you can’t afford to miss some of this information today

Ford Stokes:
On today’s show. We’re going to talk about a lot of things and all of its new. So number one is, hey, what happens when you miss the best days? Should you stay invested or should you go to cash? Right now, I’m getting we’re getting that question quite a bit. Then also, I promised that we would talk about the two year look back with Medicare and also how Medicare determines your income. We’re going to talk through that in segment segment two. And then Sam is going to hit us with a bunch of questions. You might get to it here in segment one, or it might be segment three. And we’re going to talk more about how to move money into tax free buckets. If you’re struggling in the market, it’s better to at least make sure you can take care of the tax efficiency and the fee efficiency part. And then I think one of the questions that Sam has is is when’s the best time to get your portfolio analyzed? There’s a lot of questions about when to take withdrawals and other questions out there, and we’re going to try to tackle today, but we’re going to do that. And also we’ve got our retirement cost cutter, which I think is great. I’m just going to give you guys an idea or two on how to reduce your cost during retirement. And we’re going to talk more about how to generate tax free income, also retirement income, why that’s important and help you build a tax efficient fee efficient and market efficient portfolio right here on today’s show.

Ford Stokes:
Now, obviously, we’re not going to talk about your individual situation, but we’re going to give you some hints and some things to do directionally to help you succeed and build a retirement that is successful and also. Gives you peace of mind so you can really enjoy your retirement years because it’s likely that you’re gonna be retired almost as long as you worked. And so we work with a lot of business owners and pre-retirees and retirees, and they all have one thing in common and that one thing in common is they have one check to last the rest of their lives, and we take that very seriously. And if you want us to do a free portfolio analysis so you can understand the risk you’re taking, the fees you’re paying within your current portfolio. We’re happy to help you do that. All you’ve got to do is reach out to us at ActiveWealth.com. That’s Active Wealth. It’s exactly how it sounds again, ActiveWealth.com and we’re happy to help you. We’ve got to set an appointment button in the upper right corner. You can set an appointment directly into my calendar, or you can just give us a call. At (770) 685-1777 (770) 685-1777. So let’s go ahead and talk through Hey Ford, should I stay invested? Should I go to cash right now? We got. You know, Putin threatening to invade, you know, Ukraine and what’s going on there.

Ford Stokes:
And so we talked on this show for the last couple of weeks. It’s really it’s about a thirty five day period on average that the market recovers from large single wartime events or battle events. And so it’s likely that we’ll recover on average based on what’s happened in the past. You know, on average, about thirty five days, the the total average drawdown is about one point one four percent, which isn’t crazy horrible, and it does recover over a thirty five day period on average, usually. So that’s something to consider there. But let’s talk through. Kind of what’s should you say, investor or not? So to start the year? The market has turned more volatile while it deals with geopolitical and monetary policy uncertainty. Challenges happen in markets, and it’s something that we plan for when we construct diversified and risk appropriate portfolios. Market history demonstrates that shortly following the market’s worst days are its best days. It may be tempting to try to miss the worst days, but in the long run, it might be a risky strategy that exposes. You as an investor to missing the best day, so here’s a really neat report that came from Putnam Investments based on returns based on the S&P 500 Total Return Index. Past performance is not a guarantee of future results, but if you stayed fully invested and you invested $10000 from December 31st, 2006 through December thirty first twenty twenty one and the dividends were reinvested. You’re looking at a portfolio that’s worth forty five thousand six hundred and eighty two dollars off the ten thousand invested, so about four and a half times.

Ford Stokes:
From 2006 at the end of 2006, the beginning of 2007. But if you miss the best 10 days each year. Your portfolio would have only been worth twenty thousand nine hundred and twenty nine, so less than half. Here’s even gets even crazier if you miss the 20 best days a year. Then your portfolio is only worth twelve thousand six hundred and seventy one dollars. If you missed the best, 30 best days a year. Your portfolio is worth eight thousand three hundred and sixty five, and you missed the best 40 days. Your portfolio would only been worth five thousand seven hundred eighty six, you would have taken a loss. On 30 and 40 missing 30 and 40 of the best days out there, so we think that’s a big deal. So you want to be very careful to not avoid those best days and that means you need to stay invested. And we believe in tactical asset allocation, we try to rebalance to the allocations that we think are going to do the best, we’re going to perform the best and for our clients, and that’s why we do what we do. And. We only got like four minutes left in this segment, but I want to be clear about it’s a really good idea to stay invested. Also, if you want to consider a bond replacement strategy, consider either a fixed index annuity to get market like gains without market risk. That probably sounds pretty attractive right now.

Ford Stokes:
The other is, let’s say you’re in a 60 40 portfolio, 60 percent stocks, 40 percent bonds, and you want to replace one hundred percent of the money you’ve got in the bonds. Well, what that means is, let’s say you take 20 percent of your portfolio. You invest in a fixed index annuity. Let’s say you’ve got a million dollar portfolio. You take two hundred grand and invest it into a fixed indexed annuity that’s illustrating at nine point sixty one percent as we have one that we’re working with right now, that’s doing that. That’s illustrating that rate. I mean, you’re looking at, you know, over 18 grand a year and growth off of. Two hundred grand. So that’s good and. And they’re able to do that because they’re giving you a high participation rate and how either the Barclays Atlas five or the Credit Suisse Raven Pack Index are doing, you want to avoid the low participation rates that are come with the S&P five hundred index based annuities. Those are offering like thirty two percent of the S&P five hundred dollars or thirty nine percent. We think that’s not the best strategy and plan, and we don’t think that the annuity companies deserve that much of your money. So that’s part of it. Then the other would be to invest in a structured note or structured note from last month. It’s paying out thirteen point five seven percent over the next 12 months. It’s a security. It involves risk, market risk, but they also it also presents and provides a 30 percent buffer.

Ford Stokes:
So as long as the S&P500, the Nasdaq one hundred and the Russell two thousand don’t lose 30 percent of their value between now and the next 12 months. Your principal is 100 percent protected and you get paid out one point one three plus percent a month on the money you invested in. That structured note. If you’re if you were fortunate enough and smart enough and savvy enough to invest in a structured note with us, we’d love the opportunity to help you. We have a new structured note coming out next week. We have a new one coming out every single month, and we like the American style notes that pay a higher rate of return. And it’s likely our one for March is going to be higher than the thirteen point five seven percent. So we’ll see what that comes in at. But we’re happy to help you there, but consider staying invested. But also consider replacing some of the bond portion of your portfolio to give you a higher rate of return. Imagine how much better your portfolio would perform if 40 percent of it was earning thirteen point five seven percent on average. That would be pretty remarkable. Also, with our structured notes, they cannot be called in the first six months, so you would at least get one point one three plus percent over each month over the next six months. And hopefully, as long as the there’s three indices don’t lose 30 percent of their value. Your principal is protected as well.

Ford Stokes:
So got less than a minute left in the segment here. When we come back, we’re going to talk about how Medicare determines your income. We’re going to look at the two year look back on Medicare and how you really need to start planning for Medicare at age sixty one years old. And we’ll talk through that in detail and then segment three. Sam is going to give us all a lot of listener questions, a lot of activator questions. Also, if you’re wondering who an activator is, it’s somebody who listens to this show. It’s somebody who wants to build a successful retirement, somebody who wants to protect and grow their wealth. Someone who believes if you’re going to be a bear, be a grizzly about seeking knowledge about retirement. And it’s also somebody who is looking to build a tax efficient fee, efficient and market efficient portfolio, and who also understands that retirement is more about income than it is about just building one big nest egg. Because the income is what else. What’s going to smooth out are enjoyable experiences during retirement. So we’re so glad you’re with us here on this Active Wealth Show on am notch, one of the answer when we come right back. We’re going to talk about how Medicare determines your income level and your Medicare surcharge level and then also when you need to start planning for Medicare. And here’s a hint it really is. Let’s start planning for it. Around sixty one years old. Active Wealth Show right here on a.m. nine 20. The answer?

Producer Sam Davis:
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. 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.

Ford Stokes:
And welcome back activators, the Active Wealth Show. This is segment two. I am Ford Stokes, your chief financial adviser, and I’m joined by Sam Davis, our executive producer, and you’re going to hear from him either later in this segment or at the beginning of Segment three, where he’s going to hit us with a lot of your questions. Also, if you’re looking to try to finally get an understanding of how much you’re paying in fees, what risk you’re taking, the correlation of your assets, how you’re allocated and you want a full analysis or you just want your four one k analyze and see if you can optimize that for one K. All you got to do is reach out to us at ActiveWealth.com. That’s Active Wealth and click that set an appointment button in the upper right corner. And then also, you can always call us Deborah and her team or sitting by waiting to answer your questions, or at least take your call and get you scheduled on my calendar. At (770) 685-1777 (770) 685-1777. So let’s get into it straight away here. I promised last week that we would talk about when you should start planning for Medicare and also how does Medicare determine your income and for let’s hear about this to your lookback. Let’s get straight into it. This comes from Medicare talk. How does Medicare determine your income? Original Medicare is twofold.

Ford Stokes:
It’s comprised of Part A, which is the hospital insurance side. In Part B, which is the medical practice of physician practice insurance side. They differ not only in the Medicare benefits covered, but also in how the premiums are determined. Part a premium is based on credits earned. Most people eligible for Part A have premium free coverage. The premium is based on credits earned by working and paying taxes. When you work in the U.S., a portion of the tax is automatically deducted or earmarked for the Medicare program. Workers are able to earn up to four credits per year. Earning 40 credits qualifies Medicare recipients for part A with a zero premium. A sliding scale is used to determine premiums for those who work less than 40 quarters in twenty twenty one. This equates to two hundred and fifty two dollars per month for thirty to thirty nine quarters and four hundred and fifty eight dollars per month for less than 30 quarters. Part B premium based on annual income The Part B premium, on the other hand, is based on income in twenty twenty. The monthly premium starts at one hundred forty four dollars and sixty cents, referred to as the standard premium once you exceed eighty seven thousand dollars in yearly income. If you file an individual tax return or one hundred and seventy four thousand dollars if you file a joint tax return, the cost goes up to two hundred and two dollars and 40 cents.

Ford Stokes:
As your income rises, so too does the premium amount until a certain level of income is exceeded based on a tax return filing status. On that level, the monthly premium is set at four hundred ninety one dollars and sixty cents. The amounts are reevaluated by Medicare annually and may change from year to year. Any amount charged above the standard premium is known as income related monthly adjustment amount, or Irma. We call her aunt Irma. You’ve got Uncle Sam and then Aunt Irma is on the Medicare side. And again, Irma stands its IRS, AAA and it stands for income related monthly adjustment amount. So here here’s how Medicare determines and defines income. I would say there’s a two year look back period, meaning that the income range reference is based on the IRS tax return filed two years ago. In other words, that you pay in Twenty Twenty is based on what your yearly income was in Twenty Eighteen or what you pay in twenty twenty two is based on your yearly income that was in twenty twenty. The income that Medicare uses to establish a premium is modified adjusted gross income, or MAGI. It’s your modified adjusted gross income, or AGI. Adjusted gross income is income less allowable adjustments, as shown on schedule one of your form 10 40. Magi adds back some of these adjustments. It is best to consult with an accountant on this calculation. Absolutely. Additional payments for Medicare benefits Another factor that affects the premium for Medicare benefits is late enrollment penalty, which can be quite harsh.

Ford Stokes:
If you do owe a premium, for part a but delay purchasing the insurance beyond your eligibility date. Medicare can charge up to 10 percent more for every 12 month cycle. You could have been enrolled in Part A.. Had you signed up, the higher premium is imposed for twice the number of years that you failed to register. Part B late enrollment has an even greater impact. The 10 percent increase for every 12 month period is the same, but the duration in most cases is four as. As long as you are enrolled in Part B, so that was a lot to kind of sift through and go through. But what this means is you really need to do everything you can to start preparing and doing Medicare planning and Roth Ladder Conversion planning at age 60 or sixty one. And you also got to make sure you don’t miss your enrollment and start, you need to start at age 65, even if you’re still working. This is a big deal. And this is something you really can’t mess up. And there’s also not enough information out there about this. That’s why we work with Bonnie Dobbs and Medicare and other red tape. That’s her company. She’s got over two thousand Medicare paying clients that have Medicare supplement insurance or Medicare Advantage. We also don’t mix retirement consultations or investment consultations with Medicare. We kind of wait to seventy two hours as required by the state government because we want to make sure that when you’re making a Medicare decision, you stay completely focused on your health care and what that Medicare insurance cost is going to be the supplement or whether you’re going to select Medicare supplement insurance or whether you’re going to select Medicare Advantage.

Ford Stokes:
We want to make sure you make an informed financial decision on that because making a smart health care decision during retirement is a big deal. We especially when you’re dealing with market volatility and market downturn, and you’ve got to at least make sure you’re taking care of the things you can take care of. So one of the things you can take care of is signing up on time with Medicare and also trying to minimize your Medicare surcharges by minimizing your income at age 60 to sixty three and sixty four. And because they’re going to give, they’re going to do a two year look back and your Medicare eligible at age sixty four and three quarters, right for you to sign up and then you start being on Medicare at age sixty five on your sixty fifth birthday and then you start paying in for Medicare. And if you’re taking Social Security, they they deducted from your check. If not, you send them a check every month or do an auto deduct out of your bank account. So you need to do everything you can to plan properly for Medicare, for sure. But so many people don’t start thinking about Medicare until they’re sixty four or almost right at sixty five.

Ford Stokes:
And I know our activators out there are smarter than this. I know you guys and gals are going to start looking at it. Also, what this means to is and we’ll talk more about this in segment four. But there’s also really means is Roth Ladder Conversion you need to pick, do you want to be Medicare surcharge efficient or do you want to be really tax efficient? I would recommend trying to get some of your Roth Ladder Conversion out before you’re sixty one years old, but definitely get out before you’re seventy two because when required, minimum distributions kick in at age seventy two and you start taking money out of your IRA and you’re not just taking money out of your investment account or. Other accounts you have. Or you’re generating tax free retirement income. We’ll talk about in segment four with the Rule seventy seven, oh, to plan. You need to make sure you’ve got a plan for that because you don’t want to just spike your income at age 60 to sixty three sixty four for no reason and then you’re paying. You know, a couple of hundred dollars more in Medicare surcharges because you decided to to implement your Roth Ladder Conversion. I will tell you, I think we are in historically low tax rates. I don’t think I know because I see the U.S. historical tax charts and we can even give you one of those.

Ford Stokes:
If you want to reach out to us, just send me an email at forwarded ActiveWealth.com or just click on the set appointment button on ActiveWealth.com and we’ll we’ll get that to you. But. It’s a big deal. I mean, right now. The twenty four percent bracket, if we were to go back to 1960 to 1963 rate during the Kennedy years, the current twenty four percent bracket was actually fifty six percent, which is eight percent higher. That’s eight percent higher than 2x of where it is today. So I would encourage you to try to take advantage of historically low tax rates, especially as we might be dealing with military conflict. And that’s usually when the U.S. government always goes up and tack with tax rates. And we’re also dealing with geopolitical events and we’re dealing with runaway inflation. And at some point they’re going to make sure that you’re paying your you’re part of their mistakes, right? And now we’re over 30 trillion dollars in U.S. debt. I just don’t see a way where we do not increase our tax rates going forward. And there’s really no way to really inflate out $30 billion, I mean, $30 trillion in U.S. national debt. So. Please do me a favor. Get going on on Medicare planning and try to start it sooner than later and also get going on Roth Ladder Conversion planning because you want to kick the IRS out of being your partner in retirement, you want to divest them out of your portfolio.

Ford Stokes:
We’re going to talk more about that in segment four. But in segment three, our next segment, we only got like 30 seconds left in this segment. Next segment, Sam is going to ask a lot of your questions, and I’m going to answer them because we’re here to make sure that we’re we’re here for you during this difficult time and we’re going to do everything we can to give you all the knowledge you can make informed financial decisions. Also, if you’ve been listening to the show for a really long time, we invite you to go ahead and reach out to us and just schedule a consult with us at (770) 685-1777 or just visit ActiveWealth.com that’s ActiveWealth.com. We come right back to the break. We’re going to hear from you, we’re going to hear your questions. And there’s some really important questions about when you should consider taking withdrawals even during the year and when’s the best time to do that, and also when to get an advisor to analyze your portfolio. And also, I think there was a question about what a secular or bull market means what is a secondary bear market mean? And we’re going to answer all those questions right when we come back to the break. You’re listening Active Wealth Show right here on a.m. 920. The answer.

Ford Stokes:
And welcome back activators, the Active Wealth Show and Ford Stokes, your chief financial adviser, and Sam Davis, our executive producer, is going to ask a bunch of your questions of me during this segment. So Sam, go ahead, fire away.

Producer Sam Davis:
Yeah, so first one comes from Angela. She is in Peachtree City, and she writes in to say, We’ve been told that we are in a long term secular bull market. Could you explain what this means? Thanks.

Ford Stokes:
Yeah, I think a lot of brokers are using that secular bull market right now to try to say, Hey, it’s OK. We’re we’ve we’ve been here a long time. You’ve had a great run when you’ve got a couple of months of downturn, but I’m just going to let me just give you the full definitions here. So. And basically what you’re talking about is different trends in the market. So a market trend is that it was really a perceived tendency of financial markets, if you will. These trends are classified as secular for long time frames, primary for medium time frames and also secondary for short time frames. Traders attempt to identify market trends using technical analysis, a framework which characterizes market trends as predictable price tendencies within the market. When price reaches support or resistance levels varying over time, a trend can only be determined in hindsight, since at any time prices in the future are not known. So I’ll give you an example if the 50 day moving average moves below the 200 day moving average, we’ve never had a market downturn or a market recession without that happening. That’s what the S&P 500 means. Stocks are worth less in the short term than they were in the long term.

Ford Stokes:
So that means you’re in a, you know, a downward curve, if you will. But let me give you the the secular trend. A secular market trend is a long term trend that lasts five to twenty five years and consists of a series of primary trends. A secular bear market consists of smaller bull markets and larger bear markets. A secular bull market consists of a larger bull markets and smaller bear markets. For the last 15 years we’ve had, we’ve had more bull markets than bear markets, so therefore it’s a secular bull market trend. That’s to answer your question. In a secular bull market, the prevailing trend is bullish or upward moving. The United States stock market was described as being in a secular bull market from nineteen eighty three to two thousand or twenty seven, even with brief upsets, including Black Monday and the stock market downturn of twenty two thousand two triggered by the crash of the dot com bubble. Another example is the 2000s commodities boom in a secular bear market. The prevailing trend is bearish or downward moving. Also, the terms bull market and bear market describe, you know, as everybody kind of knows, upward or downward marking trends, respectively. To help answer the question there, Sam.

Producer Sam Davis:
Yeah, I think I think that should help Angela out a lot, and I think that kind of helps all of us get a better understanding when we hear these terms. You know, when, when, whether it’s on television or from your broker now, you have a better idea of what that means. Our next question comes from David in Roswell, who asks When is a good time to take withdrawals? Does it matter what time of year or if the market is up or down?

Ford Stokes:
Yeah, it kind of does matter. Usually when you take withdrawals, you need the money. So usually you kind of need to probably just go ahead and take the money. But the other issue that I have with it is please don’t ask for withdrawals in a downward market in a downward market day. If you can help it because you’re going to have more sellers than buyers and you could see yourself getting less money and less money for the shares that you’re trying to sell, you’re much better off to an upmarket day, even when what they call a dead cat bounce, which is, you know, you’re in a secondary bear market where it’s in the short time frame, it’s kind of been going down. And all of a sudden the short sellers need to need to get out of their positions and and and take their profits from there. And therefore that when they get out of their positions and you get the dead cat bounce because they’re they’re taking their profits, but then they’re buying back in. So that’s something to consider there. But might the answer your question is, do me a favor? Please try everything you can to request in an upward trend market day or an upward trend. You know, several days if you can help it because you don’t want to sell when your shares are depressed and down. And if you get shares in ETFs or mutual funds or individual stocks, you want to maximize the sale of those shares because once you sell the shares, you’ve either realized the loss of the game.

Producer Sam Davis:
Ok, next question comes from Jeremy in Sandy Springs, who asks When is the best time to get your portfolio? Analyzed, I’m 49, and I think I’m 12 years away from retiring the way I want to love the show. Thanks.

Ford Stokes:
Well, Jeremy, we appreciate your support, especially in our backyard, because our office is actually in Sandy Springs. We’re in the king queen building on the twenty ninth floor. When the king building come see us, we’re over there and building six on the twenty ninth floor. And we’ve got a nice view of Georgia, four hundred in my commute home to coming, for sure. But here’s the answer. The time to get your portfolio analyzed and to get more knowledge is now. You don’t want to wait any longer. You don’t want to keep listening to this show and think you’re going to. Someday, I’ll learn enough and I’ll be able to pull it off myself. Also from for you man out there that want to set up a great legacy for your wife. Let’s say if you’re going to because all of us guys, we usually do pass away first. We got to do everything we can to make sure we’re our wives are prepared, and if you’re a do it yourself, sir, I would encourage you to reach out to our office and we’d love the opportunity to to let you know what your what your internal expense ratio is within your portfolio, what the fees you’re paying that are usually hidden, even though they’re not necessarily hidden because those fees are are itemized in your prospectuses on any mutual funds with 12b one fees and C share fees and any share fees. We want to do everything we can to help you guys build a strong financial plan that’s going to get you all the way to your ninety fifth birthday and beyond, and it’s better to understand the risk you’re taking and the fees you’re paying. And we’re going to give you a $1500 value free portfolio analysis, free financial plan at no cost to you.

Ford Stokes:
And just you know what you get, Jeremy, and we’d love to meet with you since you’re right here in our backyard too is in you’re an activator. You listen to the show. We really appreciate it is. Number one is we’ll give you a portfolio analysis again. You’re going understand the risk you’re taking, the fees you’re paying to. You’re going to get a financial plan, your ninety fifth birthday with your. Current plan in number three is you’re going to get a financial plan, your ninety fifth birthday with our recommended portfolios. Number four is you’re going to get a recommended plan with our portfolios and a Roth Ladder Conversion. And number five is we’ll give you a Social Security maximization report. And number six is we’re going to give you a retirement income gap analysis at no cost to you. And number seven is we’ll give you as much follow up and question answering as possible. We do all of this on the front end. Again, it’s a fifteen hundred dollar value because we want to make sure you’re making an informed financial decision about your retirement future. It’s crazy not to do that. And as a fiduciary, we put your needs first, and that’s why we give it out to folks for free because we also have confidence in our plans and we don’t want to sit there and and just charge for plans and then not execute the plans because we know folks can fire us at any time if we’re not performing, but our folks stick with us because we work really hard to protect and grow their money.

Producer Sam Davis:
All right, and last question, we’ve got just a couple of minutes left. Tim in Alpharetta wrote in to ask, I’ve been hearing you discuss structured notes on the show who is a good fit and what is the minimum to invest in structured notes?

Ford Stokes:
Yeah. So for prospects and clients, the best fit for structure notes is anybody that has, you know, let’s say, 20 to twenty five thousand dollars to invest or more. The minimum on a structured note is only $1000, though, so we buy them in thousand dollar increments so you can do as little as a thousand dollars. But some of our other portfolios, if you’re going to pair that, you need to have twenty five thousand dollars to be in our array star portfolio as an example, and that’s performed well over time. But I would just make sure that everybody kind of understands. It’s really for anybody, I mean, listen, no matter what your money is important to you. And so therefore it’s important to us and it’s important that we work hard to protect and grow your assets. And one of the ways to do that is a bone replacement strategy with structured notes. Imagine if you made thirteen point five seven percent over the next 12 months. Off of the the bond portion of your portfolio, that would probably feel pretty good. Well, that’s actually possible. Yes, these involve market risk, yes. Your principal is at risk in the market, but it does involve a 30 percent principal buffer as long as the S&P five hundred, the Nasdaq 100 and the Russell 2000 don’t lose 30 percent of their value, like we said in segment one. Then it’s likely. I mean, within your principal would be 100 percent protected. And it’s also and you’ll you’ll get your one point one three percent.

Ford Stokes:
Return every single month on the money you invested, so if you made if you invested one hundred grand, you’re going to get. Eleven hundred and thirteen dollars a month for your troubles, times 12 for a year. Now these notes can be called in month seven, but they cannot be called. For the first six months, you’re guaranteed to get that rate of return for four six months, you’re not, you know, your principle is not guaranteed, but it does have a 30 percent buffer protection. As long as those indices don’t lose 30 percent of their value, your your principal is one hundred percent protected. So it’s something to really consider on a structured note. And I would say anybody within the sound of my voice is eligible to invest in structured notes because we can do them in a thousand dollars at a time. So we’re here to help you. Also, it might be a good idea to try it before you really over. Commit to it, too. So let’s say, you know what I want to try. Twenty five grand in structured notes. Ok, well, why don’t you do five structure notes at five grand a month for five straight months? And that way we can do a structured note ladder and diversify and go from there. Most people are investing one hundred plus thousand dollars with us over a five month period at $20000 apiece per month, with five different banks, five different starting points to the indices in five different interest rates that further diversifies your risk.

Ford Stokes:
Because if one goes down, chances are the other four aren’t going to go down another 30 percent and another 30 percent, another 30 percent. So we feel like that’s a really good plan there. Also, we’re going to try to wrap here for this segment, but in segment four, we’re going to talk about how to move more money into your tax free buckets and get more tax efficient with your overall portfolio will also give you a retirement cost cutter, and we’ll give you our final countdown that everybody loves. Come right back. You’re listening Active Wealth Show right here on a.m. nine 20. The answer? And welcome back activators, the Active Wealth Show, I’m Ford Stokes, the chief financial adviser, and we’ve been talking about structured notes, we’ve been talking about how to generate income, how to also implement a bond replacement strategy. Again, our structured note for last month for February is paying out thirteen point five seven percent. It was offered by Bank of Montreal, which is an A-rated bank, and it also had a 30 percent buffer as long as the S&P five hundred didn’t lose 30 percent of its value or the Russell 2000 or the Nasdaq one hundred. Your principal one hundred percent protected. And we like to do five note ladders so we can help diversify people’s risk. So that’s pretty helpful, too. I want to talk about our retirement cost cutter next. So, Sam, go ahead and hit him with a sounder

Producer:
Ready to save some money. Here’s our retirement cost cutter of the week.

Ford Stokes:
So our retirement cost cutter is downsizing the family home, especially with kids living all over the place. It’s tough to kind of chase the kids and chase their jobs, especially in a post-COVID world, but downsizing the family home. Consider downsizing your home if it is more space than you need in retirement. Kids have moved out, et cetera. You’re not seeing them for Thanksgiving and Christmas as much. Take advantage of a hot housing market if it’s something you’re considering as well. So the Association for Atlanta Realtors came out and their estimate was the housing market increased. Prices increased by twenty one point nine percent in twenty twenty one. The Atlanta housing market value increased twenty one point nine percent in twenty twenty one. You’ve got to feel good if you were invested into a a house. In Twenty Twenty One versus renting, because your home value went up twenty percent, twenty one point nine percent on average and you did, you didn’t have to do anything other than live there and pay your mortgage or or pay the taxes. So consider taking advantage of a hot housing market and downsize and go ahead and grab that profit now and go into a house that’s less costly. Eliminate your mortgage and go. That’s a great retirement cost cutter idea. Think about moving to a beach or lake home. You don’t have to go to the nicest beach or the nicest lake home, but if you get on the water, the kids and the grandkids are going to want to come see you, and therefore your house is more of a destination.

Ford Stokes:
You don’t necessarily need that house sitting in bucket or Sandy Springs or Dunwoody or Alpharetta or Roswell or Marietta or Peachtree City or Cumming or wherever or Swanny. You don’t necessarily have to have to keep that house there because you may not. You’re no longer working and you can go live wherever you want. So I would encourage you to consider a the retirement cost cut this time, which would be considering downsizing your family home. If you need help finding a reputable real estate agent, I’m sure you can find somebody for sure, but we’re happy to recommend Jan Brownfield, who works near us. And she’s fantastic, and we’ll introduce you to a couple of different folks and you can make your own decisions. We don’t get paid on referrals to real estate agents. We don’t share fees of them or anything like that. But we are always trying to give refer people over to Japan so they can work with a reputable realtor. We mentioned the rule seventy seven oh two plan and what that stands for is the IRS I.R.S. Code seventy seven oh two, which basically states that any withdrawals from life insurance policies that are considered loans can be given tax free.

Ford Stokes:
Also, any death benefit that comes from life insurance is also tax free because society benefits from life insurance. I have life insurance, and if I pass away, you know, my wife and kids will will get that free, tax free death benefit and therefore they won’t become wards of the state, right? And so society and our community definitely benefits from life insurance, and I do pay for my life insurance premium every month. But at the same time, it’s a right way to go. Now I like to invest in cash value, life insurance, specifically in indexed universal life policy, so I can get market like gains without the market risk. Here’s how those work. They basically you’re investing in a little bit of you invest in a life insurance policy and a little bit of that money’s used to pay for the life insurance part of it. And the rest of it is used to pay for building up cash value within the policy, and you can take loans against the policy. And because loans are not taxable, that’s not considered income and you can really generate tax free income. And that is really all about wealth preservation. It’s also one of the only two in asset classes that’s truly tax free that doesn’t contribute to additional taxation on your Social Security, and it doesn’t contribute to additional Medicare surcharges, either.

Ford Stokes:
So let me give you a story. So I’ve got a marketing executive who works for a major company here in Atlanta, and he does well. And I’ve known him for a lot of years, and he’s forty six years old. He is putting $2500 away till he’s fifty six each month, so he’s putting a lot of money like two thousand five hundred dollars away each month. He’s he’s putting 30 grand away a year for 10 years, so it’s three hundred thousand total invested. When he turns on income at age 67, he’s looking at ninety two thousand four hundred and ten dollars a year in tax free income. Let me ask you, is it worth two thousand five hundred dollars a month just for ten years for you to get ninety two grand tax free to your 90th birthday from age 67 to age 90 and still have death benefit protection of, say, $400000? I would say yes, and most tax savvy investors have some sort of indexed universal life policy as part of their overall investment mix, so it encourage you to give our office a call. At (770) 685-1777 or visit ActiveWealth.com again, visit ActiveWealth.com. We can help you with that tax free income plan. It’s the final

Producer:
Countdown. So let’s recap what you may have missed. It’s the final countdown.

Ford Stokes:
So on this week’s show, we talked about the Medicare to your lookback, we also talked about how you really don’t want to miss the best days. You want to stay invested all year to get those bounces back to really help out your portfolio. We also answered a lot of your questions about secular bull market, when to take withdrawals and also when to get your portfolio analyzed, which is really all right now. You want to do everything you can to analyze your portfolio, both in standard deviation, which is a measurement of risk. The correlation, your assets and also the fees you’re paying. Don’t just hang in there with your investments. Do more. Take an active role. Listen, if you’re going to be a bear, be a grizzly. Be aggressive about seeking out investment knowledge and tax advantaged investment knowledge, as well as retirement planning knowledge. And we’re so glad you’ve been with us here on the Active Wealth Show this week. Next week, I promise we’re going to talk about retirement income gap analysis, how to make sure you fill that retirement income gap, and also how do we build for the future and build a smart financial plan includes smart risk, smart, safe smart tax, smart health and just smart overall investment decisions. We hope everybody has a great week. We were right back here on the Active Wealth Show next week. Have a great week, everybody.

Producer:
Thanks for listening to the Active Wealth Show. 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 Active Wealth. Investment Advisory Services offered through Brookstone Capital Management LLC become a registered investment advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer Sam Davis:
A purchaser should evaluate and understand all of the risks and costs of an investment in structured notes Essenes prior to making any investment decision, a purchase of an SDN entails other risks not associated with an investment in conventional bank deposits. A purchaser may not have a right to withdraw his or her investment prior to maturity or could incur substantial penalties for an early withdrawal if permitted. A purchaser should carefully read the disclosure statement and any other disclosure statements for a S.N. before investing. An investment, in essence, is not FDIC insured and is subject to credit risk. The actual or perceived credit worthiness of the note issuer may affect the market value of SSNs. Essence will not be listed on any securities exchange. Even if there is a secondary market, it may not provide enough liquidity to allow purchasers to trade or sell. Essenes as a holder of Essenes purchasers, will not have voting rights or rights to receive cash, dividends or other distributions or other rights in the underlying assets or components of the underlying assets. Certain built in costs are likely to adversely affect the value of Essenes prior to maturity. The price, if any, at which the notes can be purchased in secondary market transactions, if at all, will likely be lower than the original issue.

Producer Sam Davis:
Price in any sale prior to the maturity date could result in a substantial loss. Essenes are not designed to be short term trading instruments. Purchasers should be willing to hold any notes to maturity. The tax consequences of Essenes may be uncertain. Purchasers should consult their tax advisor regarding the U.S. federal income tax consequences of an investment. In essence, if a S.N. is callable at the option of the issuer, in the essence is called, the holder will receive only the applicable redemption amount and will not receive any coupon payments that would have been payable for the remainder of the term of the SSN. As ins are not, FDIC insured may lose principal value and are not bank guaranteed. This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. All data believed to be reliable but not guaranteed or responsible for reliance on this data. Past performance is not indicative of future results, which may vary the value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed and a loss of principal may occur.

Producer Sam Davis:
Brookstone does not provide accounting, tax or legal advice. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively. And investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Historical performance results for market indices generally do not reflect the deduction of transaction and or custodial charges or the deduction of an investment management fee. The occurrence of which would have the effect of decreasing historical performance results, economic factors, market conditions and investment strategies will affect the performance of any portfolio, and there are no assurances that it will match or outperform any particular benchmark. The investment strategy and types of securities held by the comparison indices may be substantially different from the investment strategy and the types of securities held by the strategy, not FDIC insured may lose principal value. No bank guarantee

Producer:
Listen to the number one show on the weekends on a.m. nine 20. The answer to protect and grow your hard earned money. The Active Wealth Show with Ford Stokes your chief financial advisor Saturdays at 12:00 noon and Sundays at 11:00 a.m..

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