Tax Advantaged Investing Strategies You Need to Know About

January 18, 2022 00:47:26
Tax Advantaged Investing Strategies You Need to Know About
Retirement Results
Tax Advantaged Investing Strategies You Need to Know About

Jan 18 2022 | 00:47:26

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Show Notes

On this week’s episode of the Active Wealth Show, Ford explains how you can implement different tax-advantaged strategies to build more wealth and ensure a successful retirement. As always, Activators can get a retirement plan mapped out until their 95th birthday absolutely for FREE; just schedule a time to talk below or call ( 770) 685-1777.

Book your free no-obligation consultation: www.ActiveWealth.com

Watch more episodes: www.ActiveWealthShow.com/podcast

Request your free copy of Annuity 360: www.Annuity360.net

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ActiveWealthShow011422.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
We have Ford Stokes, author of two important personal finance books Annuity 360 and Taxes are on sale here on AM920. The answer as the host of the Active Wealth Show Saturdays at 12:00 noon and Sundays at 11AM.

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. 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.

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 the Active Wealth Show activators on Ford Stokes and Chief Financial Advisor. And I’ve got Sam Davis, our executive producer here with me and Sam. It’s good to have you back, buddy.

Producer Sam Davis:
Thanks, man. Happy to be back and welcome to the weekend activators. Hope you’re enjoying January twenty twenty two. A little too cold for my taste, but I’m glad that we’ve got the new year started and we’re on a roll.

Ford Stokes:
Yeah, no doubt. So what we’re going to talk about today is we’re going to talk about building a smart financial plan, and we’re going to focus mainly on smart tax today and we want to get started really quick and go straight into a market update

Producer:
Your Active Wealth market update.

Ford Stokes:
So stocks rise even as producer prices soar and Boeing jumped as well. The producer price index jumped by a record nine point seven percent in December. The Dow Jones Industrial Average rose over 100 points, or 0.4 percent on Wednesday, while the S&P 500 and the Nasdaq Composite rose zero point three and zero point four percent, respectively. Everybody, all the activators out there, just what they’re trying to do is there’s just trying to recover off of kind of the market adjustments that we’ve seen and some of the give back that we’ve seen over the first week and a half, I would say, of the New Year and or almost two weeks now. And the December producer price index, like we said, jumped nine point seven percent, which is a record, while month over month prices rose two point two percent less than expected. Factoring out volatile food and energy costs, core producer prices rose zero point five percent in December, slightly below November’s 0.7 percent gain year over year. Look, core CPI rose eight point three percent in December. On Wednesday, consumer prices, they came out with CPI and it rose seven percent and it was the most since 1982. New claims for unemployment benefits unexpectedly rose by 230000 last week and above the 52 year low of one hundred and eighty eight thousand reported in the first week of December.

Ford Stokes:
Continuing claims, which track the total number of unemployed workers collecting benefits, fell to one point fifty five million in stocks. Boeing rose. Helping supporting the Dow after Bloomberg reported it will soon restart sales in China for the 737 MAX. Delta Airlines also rose after CEO Ed Bastian signaled a recovery by mid first quarter after the airline posted a loss of 408 million tied to COVID disruptions. Eight thousand of his employees have tested positive for the virus. United Airlines also disclosed three thousand of its employees were infected, resulting in flight cancelations. Taiwan Semiconductor is a winner after posting record quarterly profits and forecasting revenue of as much as 17 billion higher than the same period a year ago. Richard Branson’s Virgin Orbit had a satellite launch on Thursday afternoon, while Virgin Galactic rolled out a $425 million bond offering. Vaccine makers continue to report developments, with Moderna disclosing it will release data for treating children two to five years of age by March. Please consider not doing a vaccine for your children, not a doctor. Don’t play one on TV. I would just say be very careful about what you’re what vaccine you’re putting into your kids, folks. And in commodities, oil slipped to eighty one dollars per barrel. All right, Sam, let’s go ahead and share our inflation demonstration as well.

Producer:
It’s time for an Active Wealth inflation demonstration.

Ford Stokes:
So inflation rose at the fastest pace in nearly four decades in December, as rapid price gains fueled consumer fears about the economy and sent Joe Biden’s approval rating tumbling. The consumer price index rose seven percent in December from a year ago, according to a new Labor Department report released Wednesday, marking the fastest increase since June of 1982. Rising inflation is eating away at strong gains and and wages and salaries that American workers have seen in recent months. Real average hourly earnings rose to just 0.1 percent in December as the point percent inflation increase eroded the point six total wage gain, according to the Labor Department. On an annual basis, real earnings actually declined two point four percent. The inflation spike has been bad news for Biden, who has seen his approval rating plunge as consumer prices rose. The White House has blamed the price spike on supply chain bottlenecks and other pandemic induced disruptions in the economy, while Republicans have pointed out the president’s massive spending agenda. Twenty twenty ones inflation will likely amp up pressure on the Federal Reserve to begin hiking interest rates as soon as March in order to combat the recent price surge. Hiking interest rates tends to create higher rates on consumers and business loans, which slows the economy by forcing them to cut back on spending. The worry is that draining all of this inflation out of the system could trigger a gut wrenching recession like we had in 1981 and 1982. The story of rising prices and declining real incomes never has a happy ending. Jimmy Carter lost the presidency because of runaway inflation. If this inflation isn’t tamed immediately by, the Democrats are likely to suffer the same fate. And God willing, I just really hope for that. Hey, Sam, so you put together some grocery store shortages due to Omicron and supply chain disruptions and want to kind of bring you in and talk about that. The big ones that you saw were toilet paper, aluminum, canned goods, chicken tenders, cream cheese, pet foods, Lunchables and beer. And so that’s hiking prices for what you and Bailey are enjoying. When you guys go to the grocery store as well, right?

Producer Sam Davis:
Yeah, I mean, most of those items are on our monthly grocery list, for sure. I think the toilet paper shortages become very clear because that just takes up so much shelf space. So once those are off the shelves, things really start to look empty. Same with the canned goods. I’ve seen a lot of empty shelves in the canned goods aisles, and this report backs that up as well. You know, it’s it’s something to be concerned about. I wouldn’t panic and stock up too much, but I would make sure you have those essentials on hand. If you think back to early pandemic in March 2020, how tough it was to get some of those things, we could be in for that again in twenty twenty two.

Ford Stokes:
No question also. Listen, I’m not here to tell you how to vote, but I am here to beg you on how to vote. Please vote for Republicans in the state of Georgia in these mid-year elections and midterm elections. It’s twenty twenty two. We’ve got all of our congressmen coming up for reelection as they do every two years. We’ve got to get conservative representation to at least represent our voices, especially for pre-retirees and retirees out there. Because, you know, at the end of the day, when the government needs taxation taxation, they need tax dollars. They’re going to go where the money is and they’re going to come to the pre-retirees and retirees who were the good squirrels and and saved all their nuts, you know, for the for the winter. And I just don’t want to see things like Social Security get hurt or Medicare get impacted. But also, I don’t see an additional wealth tax. I don’t want to see any changes on Roth rules and things like that. Hopefully, with Secure Act 2.0, it looks like people that are over 50 years old are going to get a chance to invest on a Roth basis if they if they’re a business owner and they with their Sep IRA and the whole government is going to be looking for a Roth ification because they want their tax dollars now. But that’s fine because at least you’re going to kick the IRS out of being your partner in retirement. So and we’re going to talk about how to get smart smarter with your with your investments and how to get more tax advantaged with your investments over the next three segments.

Ford Stokes:
But let’s kind of talk through just quickly become the rest of the show. So the smart financial plan, we’re going to talk about smart tax. We’re going to talk about smart risk to try to minimize the risk you’re taking, but still get risk and reward and get that. Get the growth that you need, and for a lot of people that are seeing the markets kind of readjust here at the beginning of the year after we had a decent run up in Christmas. I just want to make sure you understand you’ve got to stay invested. You just have to. And also, we’ll talk about smart, safe solutions. We’ll talk about a bond replacement strategy or two, actually. And I think you’re really going to enjoy this one because we’re going to share new information and new ways to look at things. And we’re also going to talk about Social Security taxation and how we can get better at that and. When you come back from the break, we’re going to talk straight up off the break, we’re going to talk about. Hey, what do we do to beat Frank CDs and how do we get bond replacements going? And then we’ll start talking all about the smart tax solutions when we come back from the break and we’re so glad you’re with us here on the Active Wealth Show, and I think you’re really going to like what we have to say and some really new information on smart Social Security planning and smart tax solutions. You’re listening to Active Wealth Show right here on AM 920 The answer.

Producer:
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, I’m Ford Stokes, the chief financial adviser, and I’ve got Sam Davis with me, he’s our executive producer. Sam, let’s share our beating the bank CD segment.

Producer:
Need a higher rate of return from your safe money? Listen up. It’s time to beat the bank CD rates

Ford Stokes:
If you want to get better than a point zero five percent growth on your money with like a one year bank CD that you can get from a bricks and mortar bank, or even more than 0.6 of one percent if you’re getting a bank CD from an internet bank like Ally Bank or something like that. I would beg you to consider investing in like three different products, as also not just a bank CD replacement, but also a bond replacement. Because bonds and bank CDs, traditionally what they’ve done is they give us income and they give us safer income and or less volatile. Even though with bonds, you do have market risk and you’ve got reinvestment risk and interest rate risk and systematic and unsystematic market risk as well. But with bank CDs, you’ve got the FDIC protection, but there’s a big difference. So one I would I would ask you to consider investing in a multiyear guaranteed annuity. That’s a Miche, and that’s like a a two year or three year or five year. And we’ve got Micah’s that are paying three point one five percent for a, you know, a three year MIGA. That’s a lot better than point zero five, right? And then the second option that you can consider is a fixed index annuity, that’s something that we offer, and we’ve got one fixed indexed annuity that is offering a 10 percent bonus and also another one that’s illustrating at nine point sixty one percent.

Ford Stokes:
So I want to be clear about something you can actually get in annuity. That is going to give you an immediate 10 percent bonus on your money. Now you won’t be able to withdraw all the money right away, but it is nice and you can generate income. You can get market like gains without market risk. Your money is not invested in the stock market, but it is linked to a market index like the Barclays Atlas five or the Credit Suisse Raven PAC or the S&P 500 or the Nasdaq one hundred. There’s all kinds of different indices out there. The third option is to invest in structured notes as well, and we’ll go through that in detail. But Sam, can you go ahead and just share my chapter on bond replacement from my audio book? That’s on Amazon? And also, you can get my free book at Annuity 360 Dot Net. That’s Annuity three dot net chapter 15 bond replacement with fixed indexed annuities. Big idea Historically, bonds have seen volatility when the market is volatile. Fixed indexed annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial advisor talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. Am I firm Active Wealth management? We believe this is a smart way to protect your future.

Ford Stokes:
Many people have learned that bonds are a safe way to invest your money, but there are some downsides to bonds that should make you think twice. We’ll talk about some reasons why you should consider replacing your bonds with annuities. First, here’s some information on the history of bonds in the United States historical bond volatility. The nineteen hundred saw two secular bear and bull markets in U.S. fixed income. Inflation peaked at the end of World War one and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The U.S. government kept bond yields artificially low until nineteen fifty one. The long term bond yields were at one point nine percent in nineteen fifty one. They climbed to nearly 15 percent in nineteen eighty one in the 1970s. Globalization had a huge impact on bond markets. New asset classes such as inflation protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created. Early investors in these new asset classes were compensated for taking on the challenge. The bond market was coming off its greatest bull market, coming into the twenty first century long term bond yields decline from a high of 15 percent to seven percent by the end of the century. The bull market in bonds showed continued strength in the early twenty first century, but there is no guarantee with our current market volatility that this will hold.

Ford Stokes:
See Chart fifteen point one to see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this Why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history of loan, you can see how uncertain the future of bonds is. Inflation and fluctuating interest rates play a big role in bond yields. Interest rate risk of bonds, bonds and interest rates have an inverse relationship. When interest rates fall. Bond prices rise due to the COVID 19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option. However, this has caused bond yields to fall to all time lows as of May twenty four point twenty twenty. The 10 year Treasury note was yielding zero point six four percent, and the 30 year Treasury bond was at one point twenty seven percent. Reinvestment risk of bonds This is the likelihood that an investment’s cash flows will earn less in a new security. For example, an investor buys a ten year, one hundred thousand Treasury note with an interest rate of six percent.

Ford Stokes:
They expect it to earn $6000 a year at the end of the term. Interest rates are four percent. If the investor buys another 10 year note, they will earn four thousand instead of six thousand annually. Consider the possibility that interest rates change over time when deciding to invest in bonds. Systematic market risk This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpredictable and it is impossible to avoid. Diversification cannot fix this issue, but the correct asset allocation strategy can make a big difference. Unsystematic market risk This type of risk is unique to a specific company or industry, similar to systematic market risk. It is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes coming to the industry. However, there is no way they can know how those changes will affect the market. There are two factors that contribute to company. Pacific Risk Business Risk, there are two types of risk internal and external internal refers to operational efficiency and external would be similar to the FDA banning a specific drug that the company sells. Financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading reduced advisory fees.

Ford Stokes:
Investors who trade individual stocks may know how much commission they are paying their broker, but individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds they sell called markups, but they bundle them into the price that is quoted to the investors. This means you are unaware of how much commission you were actually paying. Standard & Poor’s estimates of bond markups is zero point eight five percent of the value for corporate bonds and one point twenty one percent for municipal bonds. However, markups can be as high as five percent, up to 50 dollars per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time. Unlike an annuity, which provides income for life, you must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss. As we discussed above, annuities will provide you with an income you can never outlive. Ok, so now hopefully you’ve learned a lot about bond replacement from that chapter. And also, it’s not just a fixed indexed annuity. You can do structured notes as well. Now, structured notes are they’ve got a 30 percent principal buffer that your principal is protected as long as the S&P 500, the Nasdaq 100 and the Russell 2000 don’t lose 30 percent of their value over the next 12 months.

Ford Stokes:
Also, these notes can’t be called in the first six months, and our structured note for January is ten point nine zero percent. If you would like a structured note. For ten point nine, zero percent, then I would encourage you to go ahead and visit Active Wealth dot com and click that set an appointment button and and let’s get started trying to help you get a disproportionate rate of return on the income portion of your portfolio. Harry Markowitz in nineteen fifty two, we talk about all the time. He was given credit for the 60 40 portfolio and what’s called modern portfolio theory. 60 percent stocks, 40 percent bonds. They’re both traded on American exchanges like the New York Stock Exchange or Nasdaq or Amex, things like that. In markets like that. And that’s great because when when stocks go down, usually money rushes into bonds, well, that doesn’t happen as much as it used to. Also, we’ve talked about it before, but the go forward price to earnings ratio on U.S. equities to attain twenty two and twenty three. So it’s twenty three times twenty two to twenty three times earnings. But would it surprise you to know that U.S. bonds are paying out? I mean, they’ve got a PE ratio at one hundred and fifty.

Ford Stokes:
So the price to earnings ratio, the price is much more elevated. You have to get one hundred and fifty times earnings for it to justify the pricing. And in all the bond money out there with the U.S. corporate bonds, that’s pretty scary. And if you don’t think there could be a bond bubble in the market, I would beg you to reconsider. And what I would encourage you to do is consider one of these three options. We’re happy to help you with bond replacements and we come back from the break. What we’re going to do is we’re going to talk about structured notes a little bit more in detail, how to understand structured notes. Then we’re going to really start diving into smart tax solutions with with Roth IRA conversions and specifically Roth ladder conversions. You want to do a little bit at a time, and then we’re going to also talk about how you can generate retirement income that you can never outlive. That is pretty remarkable. That is absolutely 100 percent tax advantaged and tax free. Come back from the break. We’re going to talk about structured notes and how you can take advantage of that as a bond replacement or fixed index annuities as well. And then we’ll talk about smart tax solutions throughout the rest of the show. And you’re listening to Active Wealth Show right here on AM920 The answer.

Producer:
Had a million dollars, well, I’d buy a house. I would buy. You listen to the number one show on the weekends on AM 920. The answer to protect and grow your hard earned money. The Active Wealth Show with Ford Stokes, your chief financial adviser. Saturdays at 12 noon and Sundays at 11 a.m.. 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 on Ford Stokes, your chief financial adviser, and if you’re wondering who an activator is, that somebody who wants to build a successful retirement, they want a tax efficient fee, efficient and market efficient portfolio, and they want to have a really great retirement income every month and they want to have a plan for when their paychecks stop. And we’re going to we’re trying to help you with that today. Talking about bond replacement and also talking about smart tax solutions as well. Right before we came back from the break, we were talking about structured notes and I want to one, I want to offer our understanding structured notes white. All you have to do is reach out to us. Just send me an email at Ford at Active Wealth dot com that’s free at Active Wealth. Or you can click to set an appointment with me on Active Wealth. There’s just a set an appointment button in the upper right corner. You’ll talk to me. You won’t talk to any of our advisors because you listen to the Active Wealth Show. We’re going to do a great job at taking care of you and then let me just share what what’s going on with structured notes. And we have this incredibly detailed report that you’re really going to like so you can learn more about structured notes, because this is kind of what private wealth management looks like when we can give you a greater rate of return than what you might get from a, you know, when you walk into a bank trying to get the same structured note because they have two different types of structured notes, you get one for the brokerage side where they’re getting a commission up front and one for the advisory side, where we’re not taking a full commission on the front and we’re just managing our money and we’ve got our advisory and portfolio fee.

Ford Stokes:
But it’s we’re able our rates of return are much higher because we’re not trying to get three and a half to five and a half percent up front and which is what the brokerage commissions generally end up being. So let me just tell you what structure note is structured notes our financial instruments, which consists of two main parts combined to generate specific risk and return profile in their most basic form structured notes or investments that combine a low risk, low return component of bonds with a higher risk, higher return derivative on a selected asset and often equities or equity indices. Basically, just think about it like this it’s a bond plus a derivative on a selected asset, and that equals a structured note in our structured notes that we offer. They come from major banks, AAA rated banks like JP Morgan Chase or Merrill Lynch or Bank of America or SunTrust, or just major financial institutions. Bank of Montreal is the one that we’re offering for this month and all of our AAA rated banks that are highly capitalized and they’re offering a disproportionate share.

Ford Stokes:
But you’re it is a it is an at risk investment. It is a security and it is market based, but you do have a 30 percent buffer on these notes that we’re offering. So as long as the Nasdaq one hundred, the S&P five hundred and the Russell 2000, as long as those indices don’t lose 30 percent of their value, your principle is protected and you get paid one twelfth of ten point nine zero percent over the over the next 12 months, and these notes cannot be called for the first six months. You at least get half of that interest, you know, so you’re going to get five point forty five percent over the next six months, which is really attractive considering you’re looking at, you know, bank CTE rates that are point zero five. Now, granted, this isn’t a bank CD, and it does involve risk. But the only time that really you’ve had 30 percent losses on those indices in your lifetime is really 2008 2009. We didn’t see 30 percent losses even in March of 2020 with the COVID 19 pandemic, so I would encourage you to consider a structure note as a bond replacement or even if you want to go safer, you can do a fixed index annuity and we’ve got some fixed indexed annuities that are illustrating at nine point sixty one percent. And that’s really attractive as well, and you can generate income.

Ford Stokes:
We like to try to stay fit efficient with our fixed indexed annuities as well. We try to avoid having our clients invest in fixed indexed annuities that involve an income rider fee. Because honestly, why? Why pay money on an income rider fee when you’re not taking income, when you’re letting that annuity grow? And there’s no reason to give the annuity company. You know, free money without them actually doing anything to earn it, and so if they’re not even allowing you to withdraw your money or you’re not withdrawing your money because you want to defer the growth on on the money you placed in the fixed indexed annuity, you want that total annuity principle to grow and then start turning on income. Then I would encourage you to build build into your plan kind of a comprehensive plan with a fixed indexed annuity that is more accumulation based and less income based that you can still take a five percent penalty free withdrawal from because there’s no reason to give the insurance company or the annuity company. Fees for not doing anything. And honestly, I don’t think you should be paying for fees on an income rider fee because why do I have to pay fees to withdraw my own money? So that’s what we work with a lot of people on to make sure that we’re not. Putting them in annuities that are going to go to zero after 20 years.

Ford Stokes:
Here’s a really good trick when you invest in a fixed indexed annuity, what I encourage you to do is make sure that you’re illustrated. Non-guaranteed rate that is market linked and index linked is higher than your withdrawal rate each and every year. So therefore, your original nest egg and your principal that you invested in the fixed indexed annuity continues to grow. So that’s a really good idea. Also, Structured Notes is a great bond replacement strategy. I recommend putting 10 to 20 plus percent of your portfolio in a structured note ladder. What we do where we invest in five different structured notes over five consecutive months with five different banks, with five different interest rates and five different starting points to the indices because the plan there is to diversify your risk off of that. And if one were to, you know, lose and go all the way below the 70 percent principal buffer level, chances are that the market’s not going to continue to go down another 30 percent and another 30 percent and another 30 percent from the starting point of the other four structured notes within your five structured note ladder. So here’s how we do it. We take one hundred grand and we take twenty thousand. In five different structure notes and over five consecutive months. And therefore, all of your structured dope money is diversified and it’s diversified your risk so you don’t have all of your eggs in one basket with one bank, you know, with one start starting point on an index like the S&P 500, the Nasdaq one hundred in the Russell two thousand.

Ford Stokes:
I know it sounds, it’s kind of confusing. You probably haven’t heard about structured notes a lot before, but I would encourage you to really consider them because they are a great way to get a disproportionate interest rate growth on your money. I think that is a really great way to go. Now let’s kind of talk through, you know, this kind of what it’s like when you start working with us. And if you want to book an appointment, all you’ve got to do is pick the phone up and call us. At (770) 685-1777. That’s (770) 685-1777 and we’re happy to help you. We’ll help build in a bond replacement strategy. We’ll build in an actively managed strategy with our tactically managed portfolios. Also, if you want to do a bond replacement with something that’s safer with a fixed index annuity, great. We’re happy to do that. If you’ve got some bank seed money that’s just sitting in the bank and not earning any interest, then I would encourage you to consider investing in it either omega a fixed index annuity or a structured note. So we’re happy to help you there. And when we come back from the break, I promised we’d talk about smart tax strategies and we’re going to talk about two specific smart tax strategies.

Ford Stokes:
One is how to generate retirement income that you can never outlive. And I’ve got a great story of someone who just started investing in this strategy who came to us through the radio show actually in the middle of December. And then we’re going to talk about how do you really implement that Roth Ladder Conversion? What’s the best way to do that? What are some of the kind of money you can really save over time and also how long a typical retirement is going to last? So we’re going to talk about all of that in segment four. It’s going to be tight because we’ve also got to got to run some of our normal disclosures, too. But we are so excited that you’ve been with us. Hopefully you’re learning stuff, you’re learning about structured notes, you’re learning about bond replacement strategies and we’re going to talk about. Tax advantaged investment strategies, next, we’re trying to make sure that we’re empowering and informing all of you activators out there. Here, after the first of the year in twenty twenty two and we’re so glad you’re with us and we’ll be right back right after the break, talking about smart tax investment strategies and the only two types of tax free products out there that you can really invest in. It was the Active Wealth Show right here on AM920 The answer

Producer Sam Davis:
If you missed any part of today’s show or any part of any of our shows, the Active Wealth show is available wherever you listen to podcast. So whether you listen to podcasts on your iPhone, your Android phone, you can find the Active Wealth Show on the Apple Store, Google Play and also on Spotify, Stitcher, iHeart. Anywhere you listen to podcast Ford Stokes and the Active Wealth Show is there for you. And while you’re there catching up on episodes of the Active Wealth Show, please be sure to leave us a five star rating. Let us know what you like about the show. Let us know a little bit more about you as an activator where you’re listening from and ask your questions. We like to answer activators questions from time to time, and once again, the Active Wealth Show is available wherever you listen to podcasts and be sure to leave us a rating while you’re there.

Producer:
We have Ford Stokes, author of two important personal finance books Annuity 360 and Taxes are on sale here on AM920. The answer as the host of the Active Wealth Show Saturdays at 12:00 noon and Sundays at 11 a.m..

Ford Stokes:
All right, activators, we’ve got a lot to pack in here in this last segment. So glad you’re back with us. So there’s only two types of tax free investments out there. We’ve talked about it before, but I want to make sure that everybody understands the only two truly tax free investments out there are Roth IRAs and life insurance. That’s it. And so let me take the second one first. So we had a young lady that approached us, and she’s a marketing executive here in Atlanta. She’s in the aerospace engineering side of the world. She works down there near Delta. She doesn’t work for Delta, but she works down there, near the airport and. She makes 210 grand a year. She’s getting about $2000 away a month for 10 years is a 10 pay. So twenty four grand a year? Not crazy. It’s about the same price as a mortgage. But when she turns on income at age sixty five, the illustration with this indexed universal life policy that is market linked but does not is not invested in the market. It’s also carries a death benefit for her to her two daughters, who are now married with kids, and she’s going to generate forty one thousand eight hundred and ninety eight dollars a year. Throughout her retirement. That is remarkable. You’re talking forty one Grand Plus or Social Security. That’s really all she needs. And so if you want a retirement income strategy and if you’re in your 30s, 40s or 50s, sometimes you get a little bit in the sixties, it’s a little bit the cost of life insurance, a little bit too high.

Ford Stokes:
But if you’re in your 40s or 50s, it’s a really good idea to invest in an indexed universal life policy. And I would encourage you to pick the phone up and give us a call. At (770) 685-1777 again (770) 685-1777 or you can visit Active Wealth dot com. So that’s the index universal life policy tax advantaged investment strategy. That’s that’s part of it. That’s really a great way to get retirement income. I told you I would tell you, Hey, here’s a great way to get tax advantage or tax free income. And the tax free income is based on, you know, society benefits from life insurance. And you’re able to do a loan against the policy and there are no taxes on a loan. So that’s how it works. It is completely legal. Called rules seventy seven oh two plans, you can even look it up. It’s in the the IRS Code. The I.R.S. Code Internal Revenue Revenue Code rules seventy seven oh two. So it’s a seventy seven oh two plan is what we what we implement and we’re happy to help you. Then the next one is just implementing a Roth Ladder Conversion.

Ford Stokes:
We’ve talked about Bob and Janice before on the show. Bob’s an engineer in town for a major Fortune 50 company. You probably guess a couple of companies he could be working with, and he makes about one hundred and fifty five grand a year, and he’s into his second year now of Roth Ladder Conversion. He started out like a seven hundred and eighty thousand IRA when he started working with us. Obviously, he’s done very, very well and that’s that, that is grown. But what’s been fantastic is he’s starting to convert and what he’s doing is he’s converting right up to the twenty four percent level needs to go into the top of the twenty four percent level. It’s meaning three hundred and forty one grand for twenty twenty two, which is the top end of the twenty four percent bracket for married filing jointly. He basically he’s taking his, you know, three forty one minus one fifty five and he’s he’s investing, he’s literally investing the rest of it into his Roth converting. He’s taking money from his IRA and putting it into his Roth IRA. He has a taxable account that is paying out all of the taxes, so his money is moving dollar for dollar from his IRA to his Roth IRA because what he wants to do is he. Here’s the really cool hint here, folks to implement a Roth Ladder Conversion the best way to do it.

Ford Stokes:
The most tax efficient way to do it is take all of your money you want to convert in that year. Do it over a five to 10 year period. Convert it, take money from a taxable investment account and use that to pay the taxes on the conversion. Because when you convert, you have to pay the taxes on that conversion that year, and it also counts towards your ordinary income for that year. He’s like, I’m OK with converting it. Twenty four percent, his blended rate is like a little bit over twenty two percent, but he’s going to save about four hundred and eighty three thousand dollars in taxes over his over his thirty five plus year retirement. The average retirement we talked about said, Hey, we’re going to let you know what the average retirement, the average retirement is about thirty five years, which is almost as long as you worked. So you need to have a very good idea on what to do if you also include the amount of money that is, kids are going to save by inheriting a Roth IRA versus an inherited IRA, it’s going to add up to literally a total of 716 grand total and reduced taxes. That’s almost the same amount. What he had originally invested in was seven hundred eighty thousand in his IRA. All right now, Sam, let’s go ahead and share the final countdown. It’s the final

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

Ford Stokes:
I can’t believe we’ve run out of time here. It went so fast this in this show, and we’re going to talk more about smart tax planning and how to build a true smart financial plan. We’ll talk about all of the elements, and it’s a lot of them with a smart financial plan next week. But on today’s show, we talked about the runaway inflation that Biden, our administration have done. We’ve also encouraged you to vote Republican in twenty twenty two in the midterm elections, and we’re begging you to do that. And then we also talk through smart tax planning. We talk. We also went through bond replacement with replacing your bonds with either and and your bank CDs, too, with a multiyear guaranteed annuity or a fixed indexed annuity or structured notes. And we also invited you to go ahead and call us or reach out to us at Active Wealth dot com to get our free report understanding structured notes so you can get a better understanding of what structured notes are. It’s actually the number one requested report that we have. And again, you just want to visit Active Wealth dot com, or you can send me an email at Ford at Active Wealth dot com, and we’ll send an email right back. No problem. Again, we want you to try to make sure you can understand what’s going on with structured notes as well. And then we talked about the two types of tax free investments out there that don’t contribute to Social Security taxation and don’t contribute to additional Medicare surcharges, and that those two are Roth IRAs and life insurance.

Ford Stokes:
And we even gave you an example of the type of retirement income a 50 year old single female is going to generate through her lifetime. A lot of times the females are smarter with money than than the guys are, at least on the saving side, and she is investing thousand a month for 10 years. She’s 50 years old, and by the time she turns on income at age sixty five, she’s going to generate as it’s illustrated at forty one thousand eight hundred and ninety eight dollars a year tax free, which is remarkable. I hope you enjoyed this week’s Active Wealth Show. I hope you learned a lot. Have you learned about structured notes and you learned about what we’re doing with tax free investments with Roth IRAs and life insurance? And you also learned about bond replacement as well and how to beat bank CDs. We’re so glad you’ve been with us. Next week, we’re going to talk about all of the factors, all the elements of a smart financial plan. You don’t want to miss it. Be sure to tune in to us next week right here. Same channel on AM nine 20. The answer from 12:00 noon to 1:00 p.m. on Saturday or 11:00 a.m. to 12:00 noon on Sunday. We’re so glad you’ve been with us. I hope everybody has a great week. Remember when you’re dealing with retirement? Knowledge is power, and if you’re going to be a bear, be a grizzly. Be aggressive about understanding all the things you need to know to build a successful retirement. 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 on 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:
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 creditworthiness of the note issuer may affect the market value of SNS. 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 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 and 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:
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. 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.

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