New Investment Strategies for Volatile Times

March 05, 2022 00:47:56
New Investment Strategies for Volatile Times
Retirement Results
New Investment Strategies for Volatile Times

Mar 05 2022 | 00:47:56

/

Show Notes

On this episode of the Active Wealth Show, Ford introduces a new structured note investment available in March. He also covers the markets reacting to what is happening in Ukraine, and how to prepare your portfolio for uncertain times. Got questions about structured notes? Call Ford now at 770-685-1777 or book your free consultation at ActiveWealth.com. 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
Request your free copy of Annuity 360: www.Annuity360.net

AWR 0305 New Investment Strategies for Volatile Times : Audio automatically transcribed by Sonix

AWR 0305 New Investment Strategies for Volatile Times : 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, investigate and now your host Ford Stokes

Ford Stokes:
And welcome the Active Wealth Show activators on Ford Stokes for Chief Financial Advisor, and I’m joined by Sam Davis, our executive radio producer Sam. Say hi to everybody.

Producer Sam Davis:
Welcome to the weekend activators. And if you are hearing my voice, dare I say, is the best weather we have had in the Atlanta area so far in twenty twenty two. Spring is here, so I hope that sometime today you can get outside and enjoy some time with your loved ones.

Ford Stokes:
Absolutely. I hope everybody stays really close to their loved ones, especially as you know, in light of the latest news events. And obviously, what’s dominating the news is Russia’s invasion of Ukraine and what’s going on with Ukraine. And unfortunately, I think we’re all cheering for the underdog. It’s just this is a really tough deal because they’re going up against one of the greatest superpowers in the history of the world. And it’s just at some point it’s just going to be a a foregone conclusion, unfortunately. And I just wish everybody the best in what’s going on with this really tragic situation. Cheering for all the Ukraine folks and hope that all the external pressures Sam, you you said that they even went as far as to strip Vladimir Putin of his honorary black belt in judo, right?

Producer Sam Davis:
Yeah, I mean, Russia and Vladimir Putin are getting hit with sanctions all over the place. Hopefully, that can stop the advancement of the Russian troops. Or at the very least, you know, let’s get some conversations started so that so that nobody needs to be hurt. You know, we’re going to talk a lot about how the news has affected the the markets, but we just want to acknowledge off the top of the show the human side of everything that’s going on. And I can’t imagine what it would be like to have to move your family and flee your home and leave everything behind just so you could have a had to have a chance at a future in a safe life. So, you know, thoughts go out to everyone involved over there and the tragedies occurring in Eastern Europe, and we hope they can get better soon.

Ford Stokes:
Yeah, no question. We’re definitely pulling for everybody there. Also, our CIO, our chief investment officer, Mark Diorio sent us a message that I want to read to you about how we’re, how he and our entire investment team. There we are, monitoring market conditions closely as geopolitical events unfold. It is important to remember that when we build risk appropriate portfolios, we consider all of market history. By using market history as a guide, it allows us to quantify the expected risk and return of portfolios consistent with an investor’s risk profile. History also provides insight on how markets have responded to different historical events. Similar to twenty twenty two in 1990, 1990 was a midterm election year. That year, Iraq invaded and occupied Kuwait. An oil price shock ensued, where the price of oil nearly doubled in a matter of weeks. Negative news dominated the headlines. Inflation was near five percent, GDP growth was below two percent, and the U.S. was on the verge of launching Operation Desert Storm. The equity market was wobbly for the first. Of the year, really almost most of the year, however, despite the headwinds, the market was able to begin a robust relief rally after the midterm election into year end that ultimately continued and took the market well above all time highs throughout nineteen ninety one. While history does not repeat itself, it oftentimes rhymes. And so it is something to consider, and we just wanted to share that information with you on, you know, at a time where we’re all really worried and concerned about what’s going on with the global events.

Ford Stokes:
So on today’s show, we’re one we wanted to kind of give you that CIO note and that came in from Mark Diorio, who’s a CFA. The next was we’re going to share what to expect when you meet with us. We’ll do that here in segment one. We’ll quickly kind of review in segment two, three of the big rules for financial investing success and for retirement success, the rule of 100, the rule of seventy two in the four percent rule. And we’ll share those chapters from my new book Annuity 360 and Segment two. Also ahead of vacation season, we’re obviously seeing oil go to over $100 a barrel and be ready for over $4 in in gas at some point soon, at least in the mid-grade I’m. I drive a Roush Ford F-150 and that requires premium unleaded and I am paying right at three dollars and ninety five cents an hour. You know, a gallon. And so look out there. And also we’re going to talk about how if you don’t plan. For your entire retirement, you think you’re just going to plan for, hey, I’m just going to build one big nest egg, I’ll be fine. You’re not doing what’s best for your retirement nest egg. We’re going to talk through that and how you need to do more than just try to build a for one big nest egg.

Ford Stokes:
And also how retirement really is about income. A plan to replace your income is a really good idea. And also having going through the retirement income gap analysis that we offer is also a very good idea for you. We’ll talk through tactically managed portfolios and how that can help you invest successfully or more successfully, more consistently and help you avoid some of the large market losses. It doesn’t mean you’re going to avoid all the market losses, but it does mean that it won’t ride the ride all the way down to the lowest end of the valley valleys out there with the markets in the performance charts. And then also we’ll talk about, Hey, we’re nearing tax season, and I just got a question for everybody. Aren’t you just tired of dealing with taxes and tired of paying taxes? So there’s a real opportunity for you to pay the least amount of taxes possible during retirement, and we’ll share that strategy in segment four. And so we’ve talked a lot about a lot of things, but that’s what we’re going to talk about on today’s show, specifically about what to expect when you meet with us. What happens if you don’t plan, how to replace your retirement income, how to how to generate a retirement income gap analysis at no cost to you so you can understand what’s going on and a definition of a tactically managed portfolio and also how to deal with tax season and how to reduce your tax liability during retirement.

Ford Stokes:
And let’s talk about what to expect when you meet us. So when you meet us, you can meet us via Zoom or you can meet us in our office here at on the 29th floor of the King Queen building. We’re in the king building. Overlooking Alpharetta and or Dunwoody, Sandy Springs and looking towards Alpharetta, I should say, and also looking towards my commute home on my way to Cumming Georgia, where I live. And because we had we had to live near the chair, Jim in coming so our girls can attend their Jim and we get we’re happy to meet with you. What you could do is you would. We’re going to ask you some questions like what your dates of birth are if you’re married or if you’re single, what your Social Security income projecting. We’re going to ask you to share your Social Security income statement. Also, your investment statements, and we’ll do a full analysis for you, including like, you know, what are your monthly expenses now and whether your monthly expense is going to be during retirement? We’re going to basically take all of that into account, and we’ll provide you with a portfolio analysis of your current plan, how much you’re paying in fees, the risk you’re taking, the fees you’re paying.

Ford Stokes:
And then we’ll also give you the correlation of your assets and we’ll give you a financial plan with your current plan. Without us, with any anything to do with us, we’ll just give you, hey, here’s what your market outlook looks like over the next thirty five plus years during your retirement years, up to age ninety five to, you know, regardless of your age, we’ll take you all the way out to ninety five years old. And then we’ll also give you one financial plan your ninety fifth birthday with our recommended plans and then also a plan your ninety fifth birthday with our recommended portfolios or plans with a Roth Ladder Conversion plan included. We’ll also give you a retirement income gap analysis so you can see do you have a positive or negative retirement income gap? And that is something to consider. Obviously, by definition, a gap kind of seems negative. But whether you have a positive or a negative income gap at above or below your monthly retirement expenses, that’s what matters. And we’ll help you out there and we’ll give you a Social Security maximization report to all of it. Together is a fifteen hundred dollar value, and we’ll give it to you. Absolutely no cost. All you have to do is visit ActiveWealth.com that’s ActiveWealth.com. There’s a set an appointment button in the upper right corner.

Ford Stokes:
We just ask you to click that and you get booked directly into my calendar. Again, you just visit ActiveWealth.com, or you can give us a phone call at (770) 685-1777 again (770) 685-1777 and with less than a minute left to the break. We’re going to play the three rules here in the next segment, so you can understand three rules to kind of follow. We want to get down to foundation as we’re all a little bit concerned about the markets or concerned about what’s going on with geopolitical events with Russia invading Ukraine. And it’s a really good time to get foundational and get back to the basics. And we’re going to play three chapters from my book Annuity 360. The Rule of 100, the rule of seventy two and the four percent rule. And right when we come back for the break. But we’re going to keep talking also about. What happens if you don’t do implement an overall plan, you don’t get to a tax efficient plan? And also, what is your plan to replace your retirement income or to replace your income for retirement, I should say. We’ll try to help you out with a tax and manage portfolio and tax smart investing. All we come back from the break, you list the Active Wealth Show right here on a.m. nine 20. The answer.

Producer Sam Davis:
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 and is not a solicitation or recommendation of any investment strategy.

Ford Stokes:
Welcome back, everybody to the Active Wealth Show, and I just want to welcome back our activators, so for people that are wondering who an activator is it somebody who wants to have good news during retirement? They want to build a tax efficient fee, efficient and market efficient portfolio. They want to retire successfully. They want to inspect where they expect they if they’re going to be a bear. They’re going to be a grizzly about seeking investment and retirement knowledge. And part of that good news, we haven’t done this in a long time, but we wanted to share a little bit of good news on the show today. So, and kind of an homage back to Sierra Wilson, who used to be one of the one of the hosts here and the producers here. Sam hit them with some good news.

Producer Sam Davis:
It’s hard to believe that for one, that I’ve been helping to produce the Active Wealth show for two years now. So March 2020 is when I started and it’s March twenty two now. So but what that also means is that we’re kind of two years into this COVID 19 pandemic, which man that that time has really flown by. But the good news this week is that there’s been a lot of mask requirements lifted all across the United States, and CDC guidance and recommendations now suggest that more than 70 percent of the U.S. population is now OK to not wear masks. Of course, they’re still going to be places that people continue to wear them on planes and airports and stuff like that. That makes sense for the time being, but I think it’s just so nice that we can start to take the masks off. And there’s a lot of people that are going outside and and going back to work. And I think that despite all the events in Eastern Europe and oil prices and election year uncertainty and stuff like that, I think we have a lot to be grateful for and I think it’s going to be a fantastic spring and summer ahead.

Ford Stokes:
Yeah, I agree. I think it’s going to get hopefully get a lot better and it’ll settle down, hopefully in Ukraine soon. And we’re also thankful for you. I’ll tell you, Sam, we’re super thankful you’ve been with us, you know, throughout all of COVID and everything else is unbelievable, and we’re just really thankful that you’re our executive producer. Thank you for your service and your help.

Producer Sam Davis:
Yeah. Well, I love being here. I love hearing from the activators. You know, I really feel like the people that we reach with this message and especially the ones that they get back in touch to get back in touch with us and get some help. You know, we’re really making a difference in their lives and their families lives moving forward. So it’s really been a pleasure. And you know, frankly, despite all the negative stuff over the past two years, it’s been a great time for me. You know, I’ve bought a house, I’ve gotten married and and started a new job, so it’s been a good time.

Ford Stokes:
That’s great stuff. So thanks again, Sam, and I’m so glad that you and Bailey are doing well and doing great. And she’s a very successful actress or actor here in the state of Georgia. And we look forward to when you guys have little Sam Davises running around, so. So Sam, we promised the good folks that we would play three rules of investing and if we have time in this segment. But also, I want to make sure that everybody understands that during this tough time where you’re trying to see, we’re seeing market volatility, some uncertainty also with the Fed kind of pulling back a little bit and also trying to increase interest rates, we need to get foundational with our investing. We need to be careful about what we’re doing and follow the rules and don’t deviate from them. And the for the three biggest rules that we’ve got are the four percent rule, the rule of one hundred and the rule of seventy two. And Sam, I think the first chapter we have that we’re going to play for the good folks is the four percent rule, which basically states that, you know, if you don’t spend more than four percent of your assets, don’t don’t draw down more than four percent of your assets in a given year. You’re likely will not run out of money. And so you got to be careful about not withdrawing, especially into a declining market, because in May. Cause you did not get a high rate of return on the shares that you sell and you could lose, you know, one or two or even five percent of what you’re trying to sell at the time, just because you’re you’re trying to chase buyers and hope that the buyers will buy. So go ahead and play the four percent rule Sam. Chapter seven The four percent rule

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

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

Ford Stokes:
So we just heard my chapter in Annuity 360, and you can get that book at Annuity360.Net. Absolutely no cost to you. So just go ahead and download that free e-book there. But we heard about the four percent rule and really what it is is it’s really a great guy to tell you how much you can really withdraw each year from your portfolio and be clear about something. If you withdraw 10 to 12 percent or 10 percent from your portfolio each year, you’re going to run out of money in 12. And maybe with us, you’d run out of money in 14 to 16 years, but I promise you, you’re going to run out of money if you over withdraw. And so I would tell you to be careful and stay within that four percent rule of withdrawing money from your account. Now next, we’re going to play the rule of one hundred that really talks more about the risk you should be taking, especially during this difficult time with geopolitical events out there and Russian invading Ukraine and other factors. So play the rule of one hundred for my new book and Eighty Three Sixty Sam

Ford Stokes:
Chapter six the rule of one hundred big idea. You want to risk less as you get older because you have less time to make up any big losses as you get closer to your golden years, many financial professionals advise gradually reducing your risk. We’re. Retirees and pre-retirees don’t have the luxury of waiting for the market to bounce back after a dip. The dilemma is figuring out how safe you should be in certain stages of your life. For years, a commonly cited rule of thumb has helped simplify asset allocation. This rule states that individuals should hold a percentage of their stocks that is equal to one hundred minus your age. For example, a six year old would have 40 percent of their holdings in stocks and 60 percent in fixed income products like bonds or fixed indexed annuities. Why you should follow the rule of one hundred Take our current example of a 60 year old at age 40. Your risk capacity is higher. You have more time to rebuild your wealth should you experience a dip in the market. However, at age 60, you can’t afford to risk as much of your portfolio in the market because the time horizon to rebuild your wealth is much shorter. Rule of one 20. Many financial advisors now advocate the rule of one 20 so they can get a significant rate of return for their clients and maintain management of the portfolio. I disagree with today’s market volatility. A retiree does not want to go back to work in a job making less than what they made before. They must consider following the rule of 100 or at least a 50 50 smart financial plan that is built equally with smart risk and smart safe investments.

Ford Stokes:
Listen, that just really speaks to the risk tolerance that you really should have. How much risk you’re taking also understand the fees you’re paying as well, but you really should be considering bond replacement strategies with fixed indexed annuities or with structured notes. Also, when we come back from the break, we’re going to talk about the structured note we’re offering in March. The deadline on that is March 11th, so you’ve still got time. The investment date of that is March 11th. You still got time to invest with us. All you’ve got to do for this March note, and it’s a hefty, hefty interest rate that they’re paying out over the next 12 months. So go ahead and pick the phone up and give us a call at (770) 685-1777. But also, make sure you’re coming back and listen to us talk about the rule of seventy two. Also, our new structured note for March that’s going to pay a hefty interest rate over the next 12 months with a 30 percent buffer. We’ll talk more about that in segment three, and we’ve got a lot more to talk about on how to replace your income. How to calculate your retirement income gap and what it means to have a tactically managed portfolio. The Active Wealth Show right here on a.m. nine 20. The answer

If I had a

Producer:
Million dollars, if I had a million dollars, well, I’d buy you a house. I would buy you a house. Are you concerned about U.S. tax rates being raised by the Biden administration and how that will affect your retirement? Tune in to the Active Wealth Show with Ford Stokes, your chief financial adviser, to learn how you can reduce the taxes you pay before and during retirement. The Active Wealth show Saturdays at noon and Sundays at 11:00 a.m..

Ford Stokes:
And welcome back activators, the Active Wealth Show. We have got a significant action packed show that we’re just now halfway through. So we’re going to we’re going to play my rule of 72 chapter here next because we felt like, you know, with everything that’s going on in the world today with geopolitical events, with Russia invading Ukraine, we wanted at least get to back to foundational and kind of work on sound financial advice. The rule one hundred and the four percent rule that you just heard in the last segment are really important guidelines. So four percent rule is don’t draw down more than four percent of our assets out of our portfolio every single year. And number two is rule of 100. Let’s make sure that we’ve figured out that it’s tying back to our age, right? So if you take one hundred and let’s say you’re 60 years old and you subtract 60 from one hundred, then you’ve got 40 left over. That means 40 percent of your assets should be invested in the market should be at risk in the market. 60 percent of your assets should not be. You may want to consider a fixed index annuity, or you may want to consider structured notes that give you some principle protection. But it’s still, you know, an asset that is a security that is at risk in the market. But it does have some principle of protection up to as long as the S&P five hundred, the Nasdaq 100 and the Russell two thousand don’t lose 30 percent of their value for the time you buy that structured note, then your principal is 100 percent protected, so that’s that’s at least helpful.

Ford Stokes:
I wanted to just share this too in March, and we are now in March. We’ve got a new structured note that’s issued by Goldman Sachs that’s offered by Active Wealth and Brookstone Capital Management. It’s a 12 month note. There’s no the note cannot be called for the first six months, and the maturity date unless it’s earlier redeemed would be March 16th. Twenty twenty three. It’s going to last for a year and the minimum coupon rate on this is twelve point twenty five percent. So the minimum interest rate over 12 months that they’re going to give is twelve point two five percent. It’s they’re going to give you per month, they’re going to give you one point zero two percent every single month. That interest rate is part of the contract. With this structured note, it’s offered by Goldman Sachs, which is obviously a highly rated wire house and bank. And so we’re super excited that we’re able to offer something that’s paying out twelve point twenty five percent or one point zero two percent a month, which is literally more than double what you can get by going to a bricks and mortar bank on a one year bank. I mean, when your bank cities, they’re offering like point zero, five percent, folks. And if you go to Ally Bank or somewhere like that, you might be able to get points six percent over a 12 month period.

Ford Stokes:
This is over a 12 month period, and we’re giving you a structured note giving the opportunity. It is, you know, it is security. It is at risk in the market, but we’re giving the opportunity to earn one point zero two percent each month. Over the next 12 months, and most of these notes are called in month seven and we roll them over into new structured notes. A few weeks later. But imagine if you can get over six percent over the next six months on the money you invest. We also like to do structured note ladder, so we like to do five consecutive structured notes with five consecutive months. And we think that’s the right way to go because it also diversifies your risk. Because chances are that if one structured note hits the trigger event at 30, where the markets lose 30 percent of their value, it’s more than likely that the other four wouldn’t hit those same trigger events because they’ve got different starting points on the indices. Example If you’d invested in December into a Bank of Montreal note that was paying 11 percent and now we’ve got notes, we’re paying twelve point two five percent. But you would have had a different strike price on those indices in January, also in February and also in March, because we’ve seen some market downturn and some market sell off in January, February and March. And so your December, January, February and March structured notes would all have different starting points in the indices. And therefore we better protect you because they’re likely not going to go down another 30 percent and another 30 percent from those levels that the original note in December had.

Ford Stokes:
So it’s just something to consider, and I consider that a bond replacement strategy. We like to put 10 to 20 percent of our clients assets into a structured note ladder to diversify their risk. And also, we’re not huge fans of bonds these days because with rising interest rate environment, the bonds you currently hold are going to lose more market value. And that’s an issue. And we don’t want to have kind of that melting ice cube kind of a strategy. We want to do everything we can to have a really sound strategy that continues to grow so we don’t have to keep doing things the way things used to be done. And if you’ve got a heavy amount of bonds, invest in your portfolio and beg you to consider fixed index annuities as a bond replacement or structured notes. As a bond replacement, we’ve got one fixed indexed annuity that is illustrating at nine point sixty one percent right now, which is really good considering your money’s not invested in the market and you can get market like gains without market like risk. So your money is not invested into the stock market, it’s invested into the 10 year U.S. Treasury bond. And what they do is they take the interest that’s generated each year at the end of the year off those U.S. Treasury bonds, they invested into indices or options into indexes like the S&P 500 or the Russell two thousand or the Nasdaq one hundred or, you know, the Credit Suisse Raven PAC or, you know, the JPMorgan Cycle Index or a lot of different indices that are out there.

Ford Stokes:
Like I said, we’ve got one product that’s illustrating at nine point sixty one percent because they’re giving ninety five percent of the growth on those options to the client and they’re taking five percent, which is fair, and they’re able to make money on your money. But at the same time, they’re delivering back a market like return and the contractually your money. You can’t lose money in your principal or the gains that are locked in. We also like to work with products that have protection periods like a one year point to point or a two year point to point or a three year point to point. So if you’re if you go up if, say, if you have $100000 invested in a fixed index annuity and it goes up nine point sixty one percent over the first year, OK, then your account’s worth one point ninety six one, I mean, one hundred thousand one hundred and nine thousand six hundred and ten dollars. If the next year goes down nine point sixty one percent, you’re the amount that of your account is still one hundred nine thousand six hundred and ten dollars. Because they’re able to lock in your principal and your gains each year. So that’s a smart thing to consider, also, if you’ve got an old fixed indexed annuity that hasn’t been doing well.

Ford Stokes:
And it’s not generally a good rate of return, especially in over the last five years, when over the last 10 years, even where we’ve had an incredible run up in the market, then I would ask you to reconsider and rolling that over to a ten point thirty five tax free exchange. There’s no tax event to it, especially if it’s qualified money. Let’s roll that over into a brand new annuity, and let’s get you a bonus on that annuity, where you get an immediate bonus or you get a higher rate of return over time. And that’s just something to consider. This is what private wealth management looks like when you’re we’re trying to come up with different strategies to help protect and grow your wealth. That’s really our everything we do. Also, part of protecting and growing your wealth is tactical asset allocation and tactical managing your portfolios. We don’t believe in just hanging in there. We believe in doing more and trying to rebalance at the end of every month so that we can invest your money into sectors and asset classes that we think are going to do better in the future. We would strongly encourage you to consider investing in smart risk and smart, safe solutions. Smart risk would equal. Tactically managed portfolios like what we do here at Active Wealth Management, that’s why we named our company Active Wealth Management because we are actually managing our portfolios. The other is we want to invest in smart, safe solutions like a fixed index annuity where your money is not invested in the market and you don’t have to worry and watch the stock ticker.

Ford Stokes:
One thing that we said we were going to talk about is everybody’s planning just to build this one big retirement nest egg, but you’re not doing a good enough job in tax planning and you’re overpaying in taxes and therefore your nest egg is going to have to outperform because of the tax factors alone. And if you don’t do what’s best for your retirement nest egg, if you don’t plan for it, you’re going to hurt that retirement nest egg. And we want to do a much better job with that. So you want to invest in smart risk and smart, safe solutions. And then lastly, you want to invest in smart tax solutions with Roth IRA conversions or rule seventy seven oh two plans with fixed with indexed universal life policies. Those are the two types of assets out there. If you’re, you know, let’s say if you’re in your 30s, 40s or 50s and you want to consider also how to generate tax free retirement income, believe or not, you can still do it. Even if you’re in your early 60s, you can do it and we can help you do that. We can show you a plan absolutely for free at no cost to you to help you plan for a tax free retirement. So we’ve thrown a lot at you in this segment, but only to be clear about something we can invest in.

Ford Stokes:
Structured notes as a bond replacement, we can invest in fixed indexed annuities as a bond replacement and get you a higher rate of return more than likely over time. Based on the past performance, obviously past performance, not an indicator of future results, but it is something to consider and also we should be making your portfolio a little bit safer using the rule of one hundred as well. Again, you shouldn’t be investing 100 percent of your assets just in the stock market because it’s too volatile and you need to protect your assets because you don’t have to go back to work. Listen, when we come back from the break, we’re going to actually play that rule of seventy two. Chapter, we’re going to talk about how fast it takes for you to double your money, and we’re going to talk more about how to build a smart financial plan for a successful retirement using the 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, I’m joined by Sam Davis, our executive producer. And this is our last segment here on this action packed show. I hope you really enjoy this show so far and you’ve learned a lot. We’re going to talk more about the final countdown, about all the stuff we’ve talked about today. But Sam, go ahead and play the rule of 72, which is going to tell you a great way to figure out how fast your money can double within your portfolio.

Ford Stokes:
Chapter eight Rule of seventy two Big idea Knowing how long it will take your investments to double is a good planning tool. This will help you track your investments and calculate future earnings. The rule is a simple way for you to calculate how long your investments will take to double with a fixed annual rate of interest. If you divide seventy two by the annual rate of return, you can get an estimate of how many years it will take for the initial investment to duplicate. The rule of seventy two is relatively accurate when it comes to low rates of return, but becomes less accurate as rates of return increase. Example an investment of $1 dollar annual fixed interest rate equals 10 percent. Seventy two, divided by 10 equals seven point to an investment of ten dollars with an annual fixed interest rate of 10 percent would approximately take seven point two years to grow to twenty dollars. Rule of seventy two adjustment The most realistic simulation for the rule of seventy two is an eight percent interest rate. However, you can make a small adjustment to the rule in order to make the calculation even more accurate for every three points than an interest rate strays from eight percent. You either add or subtract one from 70 to the adjustment is not necessary, but some people prefer to make this adjustment because the time frame of this version of the rule is more accurate. Example one. If your rate is five percent, you would just adjust the rule to be the rule of seventy one. This is because five percent is three points lower than eight percent, which means you subtract one from seventy two.

Ford Stokes:
Example two If your rate is 11 percent, you would adjust the rule to be the rule of seventy three. This is because 11 percent is three points higher than eight percent, which means you would add one to seventy two other ways to use the rule of seventy two things with compounded rates. You don’t have to use the rule of seventy two just for invested or loan money. It can be used for anything that grows at a compounded rate, such as population, macroeconomic numbers, charges or loans. Example the gross domestic product GDP grows at four percent annually. You could expect the economy to double in 18 years because seventy two divided by four equals 18. Estimating the effects of investment fees, the rule of seventy two can also be used to estimate the long term effects of fees that eat into your investment. Example one A mutual fund charges six percent in annual expense fees. It will reduce your investment principal by half in about 12 years because seventy two divided by six equals 12. Example to a borrower pays eight percent interest on a credit card. They will double the amount they owe in nine years because seventy two divided by eight equals nine. Estimating the effects of inflation, the rule can also be used to find out how long it will take for your money’s value to have due to inflation. Example inflation is at four percent. The purchasing power of your money will have in 18 years because seventy two divided by four equals 18.

Ford Stokes:
We just kind of learned about the rule of 72 and how do we figure out how fast our money is going to double? So example, if you were to invest into this March structured note the money you would invest in that let’s say it stayed that way over time. At the same twelve point twenty five percent interest rate, you would be looking at double your money in five point eight seven seven years. You take 70 to divide that by twelve point two five percent, and it’s your money is going to double in five point eight seven seven years. Also, if you wanted to figure out how fast your money could double in using our fixed index annuity, that was illustrating at nine point sixty one percent that one product that we’ve got available, we have access to hundreds of of annuity products, by the way. But you’re looking at seven point forty nine years, is how fast it would take for you to double your money without any market risk. I mean, both of those are really good situations. Obviously, the structured note does involve risk, but the fixed indexed annuity doesn’t involve market risk because your money is not invested in the stock market and allows you to get market like gains without market risk. So those are really important factors to consider when you’re looking at the rule of seventy two, but also look.

Ford Stokes:
You get a bond replacement strategy with a combination of fixed index annuities and structured notes. It’s something we would consider. Also, we’re going to run out of time today. We’ll talk about retirement income gap and how to figure that out next time. But I can tell you this that retirement is more about income than it is about just building your one big nest egg. It’s also really important about the type of income you generate. If you can generate tax free income, you’re really going to win. If you generate tax deferred growth, that’s another winner. If you’re only getting income from taxable accounts, where you’re having to constantly pay on capital gains rates and even ordinary income tax rates on short term capital gains, you want to be careful about building a retirement that’s built around that and you want to kind of diversify your tax buckets and diversify your risk. Also, when you’re investing in a structured note, we want to invest in a structured note ladder with five consecutive notes with five consecutive five different banks, five different interest rates and five different starting points to the indices. So therefore, we can diversify your risk further. And now, Sam, let’s hit them with the final countdown. It’s the.

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

Ford Stokes:
We talked a lot today about a lot of things, it’s probably one of the more action packed shows we’ve ever done to share a lot of really important information. We talked about our CIO note talking about how that ties back to what happened in 1990 with a midterm election and also what happened, you know, when Iraq invaded Kuwait. We also talked about what happens if you don’t plan beyond just building a retirement nest egg, that was an important thing. We went over and we also talked about the power of bond replacement and the power of proper planning with rule of one hundred and the four percent rule. So let’s don’t over withdraw money. And let’s also make sure we don’t take on too much risk as we get older. So hope you enjoy this show. Hope you enjoyed learning a lot about a lot of different aspects of investment in today’s show. Our goal is always to help you, and I would encourage you to visit Active Wealth to book an appointment with me or just pick up the phone and give us a call. At (770) 685-1777 again (770) 685-1777 Because remember when you’re planning for retirement, if you’re going to be a bear, be a grizzly. I want you to be aggressive about seeking retirement knowledge. That also means analyzing your portfolio doing an annuity x ray on your current annuities. And if you have a variable annuity, please do everything you can to get that variable annuity statement over to us. You can upload it through our workbook section on our website and we’ll do the analysis. We don’t want you emailing any statements to us because we’re here to protect your, your financial information, your contact information. But we’re here to do everything we can to hopefully protect and grow your wealth. And thanks so much for listening Active Wealth Show and hope everybody has a fantastic week.

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, BC. I’m a Registered Investment Advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCM that 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 since 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. 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 SNS, 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. 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 SNS 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 S.N..

Producer Sam Davis:
Essenes 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. 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.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you’d love including collaboration tools, transcribe multiple languages, advanced search, upload many different filetypes, and easily transcribe your Zoom meetings. Try Sonix for free today.

Other Episodes

Episode 147

October 24, 2022 00:47:44
Episode Cover

Important Social Security and Medicare Updates for 2023

On this week’s show, Ford welcomes Bonnie Dobbs as a guest to discuss Medicare changes and updates for 2023. He also shares the 2023...

Listen

Episode

March 12, 2022 00:47:43
Episode Cover

Why a Fixed Indexed Annuity Could be the Solution to Your Retirement

On this episode of the Active Wealth Show, Ford explains how annuities work and why a Fixed Indexed Annuity may be right for you....

Listen

Episode 162

March 10, 2023 00:48:00
Episode Cover

Minimizing Fees and Maximizing Your Social Security Benefits

On this week’s show, Ford explains how you should navigate one of the most important retirement decisions – when to take Social Security. He...

Listen