I often hear from people who reach out to me for information, “I’m interested in learning more, but I don’t want to put all of my money into an annuity.”
“Well, would you put all of your money into bonds?”, I reply.
“Of course not!” I hear on the other end of the line.
“So, you would only put a portion of your portfolio in bonds? Say, 40%?”
“That sounds about right. A 60/40 split in my portfolio between stocks and bonds is what my advisor has me in.”
“And if you could put a portion of your money into a product that not only gives you complete protection of your principal, but will also track an all-stock index to possibly give you a higher return than your bonds, would it be a ridiculous idea to commit the same portion of your portfolio to something like that?”
What most people do not know is that Fixed Indexed Annuities have outperformed bonds. And that’s when bonds were doing well. That has not been the case the last several years, and it’s getting even worse now that the Federal Reserve is hiking interest rates. When interest rates rise, bond prices drop. As recently as 2018, the last time the Federal Reserve raised rates, the Bloomberg U.S. Aggregate Bond Indexed turned negative. Given the current economic environment, with inflation at a level not seen in 40 years, we are likely in for continued Federal Reserve rate increases. And if history repeats itself, bond funds could potentially see the same negative returns.
In this week’s newsletter, I’m going to introduce you to Dr. Robert Ibbotson and his research paper that proves Fixed Indexed Annuities have outperformed Bonds with backtesting all the way to 1926!
If you and I have ever had a conversation, I have probably told you not to take my word for anything. There are way smarter people out there that are saying the exact same thing. I’m blessed to be in an industry filled with brilliant people and I get to stand on their shoulders while offering great solutions to the American people using some of the safest financial products on the planet.
I’m going to provide you with 2 different links today:
The first link will be to Dr. Ibbotson’s white paper published in 2018, “Fixed Indexed Annuities: Consider the Alternative”.
However, fair warning! This is a white paper that was written by a Ph.D. It is very detailed and very analytical. If you have that type of personality, then you will love it!
The second is an article was published on Wealth Management’s website in March of 2018, “Fixed Indexed Annuities Beat Out Bonds”, by Diana Britton. It summarizes Dr. Ibbotson’s white paper.
Now, you may be thinking, “these articles are 4 years old, how are they still relevant?” Well, because we are in a rising interest rate environment…again. Only this time, add historic inflation to this scenario and do the math. It’s probably not going to end well.
However, those of you who are using the Atlas Annuity Strategy do not have to worry about that anymore!
If you are not using my strategy and you haven’t had a chance to already, I highly recommend that you watch my video series, “How to Get 20% More Income in Retirement” to educate yourself on how to use annuities to their maximum effectiveness. Then, take the time to have a 30-minute conversation and share your situation with me. The best way to do that is to click the “Schedule A Call” button on this page to find a convenient time to talk, or you can reach out to me directly at 636.926.6500.
All the best,