Market Linked CDs Information for Consumers

If you designed the perfect financial product would it look like this?

Many clients  tell me they  are looking for several contradictory objectives in an IDEAL financial product!
First, they  want to know their principal is safe!
Second, they want a  reasonable rate of return on their money!
Third, they want liquidity!

If a product could do all of these thing would you agree that this is a nearly perfect financial product?
 A bank can give you the first and third items from the list but will not  deliver the second. The  market can  give you the second and the third but cannot guarantee the first.
Its now possible to get a financial product that offers 100% liquidity from day one. Even though it offers great liquidity it is designed and optimized for long term growth or even  for legacy purposes.
In addition it offers a reasonable rate of return in some configurations or the upside potential for double digit annual returns of over 12% in the best years and a mid single digit (4-7%) returns in an average year. It delivers all of this potential with outstanding safety and protection of principal.
That's the good news.

Now for the bad news. Not everyone can qualify to purchase this type of product. Minimum $ limits also apply. Contact us if interested in learning if this is right for you!

Buy Tem and Invest the Difference! Is this sound advice?

Many  readers listen or watch Suze Orman or Dave Ramsey in their  finance shows.  Don't  get me wrong.  I  like  them  both. However  there is one  area where they always  give  bad  advice!  That is  when  they  tell  clients  to only buy Term Insurance and  Invest  the  savings.   I  do  sell Term  insurance  but I generally use it as a supplement  to  a Cash Value Life Insurance policy that will always be there  when the client or their  family needs it.  There  are  several problems  with Dave and Suze's logic.
 First,
what  happens  if  you  need  to provide insurance  for  several years past the original term?  One of  several  things happens, your policy  expires with you  receiving  no benefit whatsoever, or if the policy permits you  to  keep paying, the premium jumps as much as 10-15 fold for  each additional year with an insurance need, or the policy  expires worthless and due to your then current age  and  health you  have become Medically Uninsurable.
 Second,
The problem  relates  to  the  actual  math involved. A recent  article in a professional  publication  demonstrated that the math often does not work out the way they suggest it should. I wont include  the  publication  here but  would gladly  share  the information and the  math with  readers individually. The  real  world  numbers indicate that especially in a low interest rate environment (does this sound at all like  like 2009- 2015) you are potentilly well ahead  by buying  a Cash value Life insurance product. The  author  illustrated  a Whole life  product  but there are some other products that can perform even better.
Third,
This problem  deals  with  the  rate of  return that they project  when they do  their projections. Both of them  talk about  making 7-8% per year on their portfolio.  How  many  readers can  honestly say that they  have  seen a 7-8% rate of return on their market risk assets in the  past 10 years?  Im willing  to  bet its no more thn one in a hundred who have  seen that ten year  return.  IF  you  have then  your 2003  $100,000  would now be worth  $216,000 in 2013.  This assums that  you  added no more money to the  account in that 10 yr period.  If  the average investor did not turn 100K into 216K  then the performance numbers quoted  by Dave and Suze  dont work out!!! You  can  make  that  in a good  year but they fail to  deal  with  the MASSIVE impact of the  down years.  Unfortunately real world investors  suffer in the down  years unless  they  are  using some SAFE MONEY assets in the financial plan.
Fourth,
Its very hard to beat the potential Tax advantages of a properly designed  and properly funded Cash Value  Life Insurance policy. Nothing Beats Tax Free Income!! 

I suggest that often a fiscally  smarter way to  go is  to  combine  several insurance products. At least  they  should consider  a Term  and a Cash Vale policy to minimize premium expense and maximize protection for  their premium dollars.  Of course everyones situation is different and  thats why they  should  consult  with  a licensed insurance professional  to help analyse their  specific needs.

Would you be interested in 6.25% for 34 yrs?

Would you  be interested in turning $383,000 into a guarantee income stream for 34 year and paying a total of $1,607,000. The transaction is only available to one client. when its sold its  gone. There are other similar deals available with diferent amounts, diferent payment schedules, various durations and different  nominal interest rates. Smaller deals are also available.  The payment streams are guaranteed by Billion dollar  Insurance Companies that are highly rated and very well known.  This particular opportunity is issued by an A rated American insurance company.

Whats  the  catch?
You  must qualify to purchase the  deal.
You must have adequate liquidity to afford the transaction.
You get a schedule of monthly income checks thats is modest for the  first 14 years then increases every year until the maturity in 2047
You  cant change the monthly payment amounts. The  payment schedule is available for  review
You must have a very long term focus.

Im guessing the ideal client would be a professional with  high net worth possibly a lawyer, doctor or business owner.  Possibly utilizing IRA,  SIMPLE, SEP or 401K assets. Imagine a $1.2 M  plus gain in a ROTH!  It could be a younger sucessful individual or an older client looking to  fund a Mult-generational Family or charitable trust!

What are  your  thoughts on  this  type of very long term transaction and  rate of  return??

Public comments can  be made here or 
serious inquiries would be best handled by email or phone

How much money can you spend in your retirement

Most Professional Financial Advisors use a Rule of Thumb called  "The 4% Rule". Rules help clients understand what they  should or should not do. This rule states that if you  want a high probability that your  retirement assets will last as long as you live you should  remove or spend no more than 4% of your assets per year.  This rule applies  to self managed money accounts and  does not apply to Defined Benefits assets.  Recently we have lived through 5 or more years with Low interest rate earnings, High market volatility and we are actually living longer than ever in history. A number of  economists and planners have asked and studied this question. "Does the 4% Rule still apply in todays world?" What a great question! Many financial Advisors now believe that it no longer provides adequate protect of your income for life. They believe that you should limit withdrawals to only 3 % or so if you  want your self managed assets to last for your lifetime.

A recent study that appeared in the Journal of Financial  Planning  has found that up to 18% of people utilizing the 4% Rule will in fact run out of money before they die. That is a terrifying study result! That means that many people will have  to work long and or spend less in their retirement years.

What should a retired boomer, retiree or pre-retiree do.  They can  decide to  work longer and spend less. Those are a couple of good steps. Clearly they should also convert at least some portion of their assets into a Lifetime guaranteed income stream. These products  are only available  from Licensed Life insurance agents with the products  and knowledge needed to meet  these needs.  This is what I have  focused my business on for  over 8 years. Some of  these products can Guarantee a withdrawal rate for  life of 5% or more for your  entire lifetime.  Now compare that to  the 4% Rule or maybe 3-3.5% withdrawal rate with self managed assets.  These products can guarantee you an income 25-66% more than you  can  get from any self managed assets with the same Asset value. Thes products do this with Zero Market Risk. They delivered during 2008-2009 and they  can do the same thing during the next  recession whenever the out of control goverment excess spending creates the next Recession. These products have a role to play in almost everyones retirement strategy.

When Can I Retire??

While  reviewing some  financial industry  publications  today I  came across  something somewhat  frightening. It was an article quoting a study done by a group called My New Financial Advisor (MNFA). The purpose of  the  study  was to look at Baby Boomers facing retirement and tried to  determine what  age they would  reach before they  are able  to Retire. First let me say that the study was relatively modest in  size but the  findings are still Disturbing and Frightening.  I might  say this is rather fitting on Halloween  night!!

The survey was conducted  by collecting  data on 1600 Baby Boomers. They concluded that many Boomers due to the following six factors; a Loss of Income,  Insufficent Savings,  Low Rates of Return on Their Retirement and Other Financial Assets,  Higher Than Expected Expenses,  High Taxes,  and A Low Rate of Growth In Personal Income will have to  postpone their retirement till their mid 70's. Is  that  frightening enough  for you?   I don't know about you but I don't want to HAVE TO Work until I  am in my mid 70's.  Now, I'm not saying working until age 70-76 is a bad thing!  In fact, for  many people  thats a good  thing.  I  am  saying that I would  hope that if you are still working until you are almost 80 years of age that it is because  YOU WANT TO,  NOT BECAUSE YOU HAVE TO!!

START TODAY!
Squeeze your  expense budget, use the money saved to  increase retirement  savings.  Look for  SAFE Money Financial alternatives that produce a reasonable rate of  return.  Guarantees of up to 6%  in the growth of Income Account Value, when used for Lifetime Income, are available today.  This can  be done without market risk today!  The "Without Market  Risk" is a big deal since  retirees or near  retirees cannot afford the market lossses most have seen in the past 10-12 years. Getting  Back to Even is not good  enough.  Where do you currently have your Safe Money?

I believe it was Warren Buffet who said  there are two rules in financial management.
Rule 1 Don't Lose Money!
Rule 2 NEVER FORGET RULE 1!

 If  you  don't believe  we have significant risk today. What  about  Europe?  What about our out of control Federal  deficit? Where are we going to  get the money to pay for it?  Expect increased Taxes! Ever hear  of  the  terms The Fiscal Cliff, or Double Dip Recession. What about  the increasing cost of everything you need to buy in the  Consumer Price Index (Inflation Risk)?

Polaris Financial Services
614-264-3864

Savings Needed For Retirement Rule Of Thumb

An article recently appeared in  the  Columbus Dispatch  and  the Ft. Lauderdale Sun Sentinel. The original article  was  written by Donna Gehrkee-White. The primary point of  the article  was  to  give savers a rule of  thumb to  help  determine how much money they need to  have saved prior to  retirement.  Whats nice  about  the approach is it doesnt assume  that everyone has  the  same  number. Of course everyones stlye of living and  retiring is differen, therefore their personal savinggs need is also going to  be  different. The  suggested  rule of  thumb is this.  You  should have 8 Years worth of income saved in order to plan on a comfortable retirement. In other  words if your last years income was 40,000  then 8 x 40,000  = $320,000 and if  your inccome was $150,000 then  you  should  have $1,200,000 in savings.  This  serves as a starting point. If a retiree has a large pension lifetime income stream  they may be able to  reduce the saving $ needed to  secure a safe  retirement. If  they dont they may  want  to  increase the amount they  save  before they retire. 

You  can  also work a  few extra  years to  increase  saving and  decrease  the  amount of  savings needed. Remember  this also increases their  Social Security income for life. We have  available a Social Security Calculator that  lets a client determine the optimum age to begin their Social Security Income benefit and if they are married helps to strategize how and when to begin taking SS income. This is just one of the services we offer to our retirement clients.  We also  help to increase their retirement income WITHOUT MARKET RISK.

Polaris Financial Services
614-264-3864

Seniors and SS benefits before retirement age 65

Seniors and SS benefits before retirement age 65

A recent survey of over 600 seniors shows that many people are planning on accessing their Social security benefits before age 65 to cover routine living expenses, healthcare, mortgages and utilities. This is a serious concern to me because it will reduce the SS benefits paid for the life of the senior. Tapping into SS benefits significantly reduces the amount you receive every month for life. It should only be utilized as a LAST RESORT in an Emergency situation. Several other measures should be evaluated before this drastic action is taken. Several steps we can evaluate include a HUD HECM Reverse Mortgage which improves cash flow by stopping mortgage payments as long as you and or your spouse are able to remain in your home. Another step is to review your existing life insurance policies, or increase income from your current assets.

If your assets are not currently growing by 6-7.2% per year you may be positioning your assets unwisely. If none of your assets are positioned to guarantee you a lifetime income stream you cannot outlive I Must ask Why not?? If you have lost money in the market turbulence of 2008 Let me ask why put up with that? None of the assets I manage for my clients have lost money this year! Let me repeat that NONE of my clients assets under management have suffered a market loss of value!

We can help clients with all of these things. How can we help you?
financial-services@live.com
polarisfinancialservices@gmail.com

Inflation rearing its ugly head - What should you do about it?

There are several things every investor or saver needs to keep in mind as we move forward. Over the past 18 months inflation has been at above average levels it actually peaked at 5.6% back in July 2008. That represented a 17 year high. But even though it has dropped since then there are 8 months with a rate at or above 4%. The statistics show a 3.8% inflation rate for the CPI for all of 2008. Obviously we don't yet know the total inflation rate in the CPI for all of 2009. That means that any one using a bank for a safe money resting place has actually lost money while searching for a Safe Money Haven. Banks are still failing and they are still Failing to pay you a fair rate of return on the money you place in the bank at the same time they are charging a Record high rate on the money they loan out.

There are excellent Safe Money alternatives that can provide a better rate of return with excellent safety. They can even include upside potential if the market climbs while offering protection from market declines. Ask us how this can work and fit into your financial strategy
for the future. Non Bank Financial Alternatives still make excellent sense today. Protection from market risk makes just as much sense today as it made one year ago. We can help on both counts!

Are you interested in a Second Opinion about you financial nest egg. We can provide you with a no charge Second opinion and also help you position some of your assets in excellent safe money financial alternatives.

How To Avoid Financial Meltdown

Just wanted to share an experience I had this week with a Revocable Living Trust client. This client is a retired physician and his wife's estate. They had set up a Revocable Living Trust. I was working with them on a Trust and Estate planning review. Here is what we found with the review we just completed. The trust was properly executed but not properly funded. The result of not having funded the trust properly before now could have been a Disaster for the heirs if the couple had died before the review or before they complete the implementation of these strategies. They hold real estate in three states leaving potential probate liability in all three states. They have approximately $2 million in real estate value. Conservative estimate of current probate risk is anywhere from $150-400K. It actually could go higher but it is unlikely to be less. This is unnecessary and avoidable risk for the estate. Our attorneys tell us that Properly funded trust owned real estate avoids the probate process and all of that unnecessary expense. Saving for the estate if they complete the funding process would equal$140-390K using the recommendations identified through the review process. The attorneys we work with can take care of all the legal paperwork for a very reasonable price. Failure to complete the process is likely to result in the need to sell the beach condo and ski condo in order pay the probate costs on both properties.

Then with the financial portion of the review process we identified other potential problems and offered other suggested solutions. The financial assets are currently exposed to far to much market risk considering the clients ages. In fact like many potential clients they have lost over 35% of their liquid assets to this market turbulence. Repositioning of assets into more age appropriate categories will protect the clients assets from virtually all market risks. Some percentage of their assets will still remain exposed to market risk or to inflation risk. You can not avoid 100% of risks with all assets and still maintain adequate liquidity. The financial review process is designed to help determine the right mix or risk money, safe money and liquidity ratios need to protect the clients best interests. When this is completed the clients will never again have to worry about the impact of market turbulence on the majority of their assets. We can actually guarantee this family the prospect of roughly doubling their money over the next 10-11 years with additional upside potential if market conditions turn around. We can do this at the same time that we protect the bulk of their assets from risk

A fairly recent study discussed in the Wall Street Journal indicated that approximately 75% of high net worth individuals are either moving all or most of their assets to new financial managers. It is no surprise considering the losses suffered by most individuals. However, NONE of the assets I have positioned for my clients have lost money!!! We have never lost money for any of our clients.

All in all we would say that was a nice days work! How can we help you protect and grow your assets, increase your income, and or increase your legacy for your loved ones. Feel free to contact us. How can we help you to find out what strategies are right for you and your unique
situation?

website address www.columbusfinancialplanningpros.com
email address polarisfinancialservices@gmail.com

Your 401K Performance

Most peoples 401K plans lost between 25-39 % last year. However that is not necessary. It is possible to have a 401K plan that cannot loose money. Obviously it has to be a Company decision to offer performance options that can give you reasonable growth without market risk. We can actually design a 401K Plan that does just that!

Retired employees have the option of taking their entire balance out of an existing 401K plan and putting it into a rollover IRA that allows you to to utilize Safer Money Financial Alternative products that do not loose money in market downturns and in fact can guarantee an annual increase of over 7% in the income account value. In addition to market protection from downside risk it can also give you the ability to create a lifetime income stream with your assets. Lets find out if these products are right for you.

We can also help protect you or minimize your risk due to inflation risk. This is something a bank deposit, or a bank CD does not accomplish. Often times when you subtract the tax rate and the inflation rate from a bank interest payment the ACTUAL Rate of Return is a net negative number. This means you gave them the use of your money for years and you actually can end up with less buying power than you started with!!! Do you think this is fair? I Don't!

Lets talk about your reasonable alternatives!

Current market conditions review

We just finished the worst Jan ever recorder in the Dow and the S&P 500 indexes. The Dow was down over 8.8% and the S&P was down over 8.5%. Banks are still being closed by the FDIC. Six new bank closures in January 2009. The only good news is that we have not fallen below the market lows set in November 2008. That trend has convinced many analysts the worst may be over. Most Economists are still predicting a weak economy throughout 2009.

With this continued market weakness is now the right time for you to be looking for Safer Money Financial Alternatives for your assets. My average new client from early 2008 will see a 6-12% increase in their Income Account Value on their 12 month aniversary. This is not a home run by any means but consider what has happened top those invested in the market. Are you ready to join the better than 75% of the high net worth individuals who a recent study found are ready to change their financial advisors. If you are interested in protecting your assets from market downside risk while participating in upside potential contact us. We can help!

Have we passed the worst of this drop in the markets.

Have we passed through the worst of the market doldrums?
Unfortunately no one knows for sure whether we hit bottom in November or if we are in a dead bear bounce rally. History shows us that you cannot time the exact bottom. What I will say is this. When the markets collapsed almost 40 percent the common investor took more of a beating than they needed to take. They had too much money at risk of market declines! There is an answer which can protect you from market risk and let you participate in market growth whenever that turnaround happens! That's what Safer Money Financial Advisors recommend. Everyone over age 35-45 should have some percentage of their assets allocated in this manner!

Markets that can drop 40 % in a matter of weeks are not safe places for the bulk of your financial assets. The recent 25 % upturn is a good thing but it does not guarantee you will not see another 25 % or greater downturn in the near future. Furthermore all of the bragging about the 25 % upturn ignores the fact that even if we add another 25% upside bump that you probably are still not even with where you were in September 2008. Do the math a 100 start point drop 40% leaves you with just 60 getting you back to 100 (your start point takes a 68% jump from the bottom.

Instead take some portion of your assets and allocate them so you are truly protected from both market risk and inflation risk. The result is that when the markets go south you do not loose and when the markets start going up you will realize some of but not all of the market gains. For most individuals this is a superior financial strategy for asset diversification and it is something we would be glad to help you implement with a portion of your fiscal assets.

These products may not be right for everyone. A suitability review will be conducted when we get to talk about your specific situation. However consider the alternatives. You are left to the whims of the market and its downturns or you use treasuries, or Bank CD's which protects principal but leaves you with inflation risk. Our alternative on the other hand beats bank CD rates, typically will beat inflation rates, and will give you the upside potential while protecting you from market risk.

Wall Street Journal reports trend changing Financial Advisors

A Wall Street Journal article reports that " Fully 90% of investors with over $1 Million or more in investable assets plan to take money away from their current financial advisor and 70% plan to leave their (current) advisor altogether." The Wall Street Journal October 2, 2008

This makes sense now even more than it did in October since we have continued to see market drops almost daily. Why would anyone stay with a financial advisor who has contributed to your loss of as much as 30-40% or even 50% of your financial portfolio? There is a better way! Have you suffered enough to justify a one hour investment of your time in order to find out?

Some people have said why move assets now? The answer is the same answer I have been giving to my clients and potential clients since early September. Any assets that you reposition now are protected from future market turbulence. You still get to participate in any market rally. You have the possibility of double digit gains of as much as 20% or more depending on what product we select for your needs. Some products even offer a bonus of from 5-15% to help ease the sting of the market beating you have suffered. For people consumer with fear take control of your future. We can set up a program to dollar cost average by committing some cash now and more later.

None of the client savings assets that I manage have lost a dollar due to market risk in two down market cycles since 2001. That is an achievement I am proud of. Can you say that about your current financial advisor or banker? Even a bank CD today is suffering a loss due to inflation risk! My average client over age 40 has seen a gain in their income account value of 6-7.2% in the last 12 months. My average new clients have seen a total return of 11-12.2% in the past year. I choose, to only offer my clients Safer Money Financial Alternatives that can provide most or all of the following benefits.
1. Protection of principal from market risk.
2. Minimum performance guarantees protecting you in market downturns.
3. Upside earning potential in good years.
4. Long term earning growth that outpaces inflation.
5. The possibility to create a lifetime income stream you or you and your spouse cannot outlive.
6. Limited penalty free liquidity provisions may apply
7. Some products offer client bonuses of from 5-15%
8. The ability to sleep well at night because you are protected from market turbulence.

These products are not right for every client. There are minimum dollar contributions needed to participate. These products have a long term focus. Surrender charges may apply if you withdraw more than the penalty free amounts in any given year before the Surrender period expires.

We offer a free initial consultation. There are a range of helpful products and services available.
All products are offered by licensed professionals. Does this sound good to you? How can we help you better weather the financial storms??

polarisfinancialservices@gmail.com
www.columbusfinancialplanningpros.com

Indexed annuities beat Bank Cd and S&P 500 indexed fund

A recent study completed by the advantage Compendium was quoted as reporting that over a 5 year period the performance of a fixed Indexed Annuity tied to the S&P 500 outperformed bank CD's and S&P 500 index funds. The five year study found that indexed annuities overall increased by 5.4% per year over the 5 year time period. This beat inflation and resulted in a real growth of asset value in the study period. The Bank CD rates averaged 2.78% per year over the 5 year period. The comparison was based on sequential one year CD's. A 5 year CD would have improved on the Bank CD yield but would not have doubled the effective yield. So even compared to a five year CD the indexed annuity out performed the CD. According to Bankrate.com website the most recent national average one year CD rate is 3.48% and the most recent 5 year rate is 3.88 or a 0.4% difference in annual yield.
The study went on and pointed out that the 5 year performance of an S&P indexed fund with a 0.15% management expense ratio performed at a rate of 5.05%. The study data actually was generated before the most recent market turbulence. What would the data look like if we went back 5 years from todays date?

Why might a smart client want to consider a Fixed Indexed Annuity for some portion of their Safe Money Assets? Several key reasons come to mind Inflation beating performance. Market Risk Free financial growth. Tax deferred growth.

How can we help you?

Current Hot Interest Rate Deals

Periodically we update clients and readers on great current interest rate deals. These are guaranteed rates for the term listed and are subject to change. Contact us for details or to determine minimum amounts required and determine suitability to meet your needs. These rates apply for both qualified and non qualified money sources.
10 year 6.5%
7 year 6.0%
5 year 5.7%
3 year 4.8%

Now lets compare these rates to those listed at bankrate.com Please remember that although FDIC Insurance protects you principal it does not guarantee the earning rates if the bank gets into financial difficulty. This little know fact was reported in an article in the Columbus Dispatch earlier this fall. The first set of interest rates are approximately 50 % higher than the rates listed below which are the bank rate national averages listed today on the bankrate.com website

5 year non qualified money 3.88%
5 year qualified money 3.67%
1 year non qualified money 3.48%
1 year qualified money 3.12%
The first set of interest rates are approximately 50 % higher than the bank rate national averages listed today on the bankrate.com website. Why would anyone want to earn a 50% lower rate of return than they can earn.

How can we help you prepare for your financial future?

polarisfinancialservices@gmail.com
www.columbusfinancialplanningpros.com

Current Top Interest Rates Available

Best Interest Rates Available For Savers

Here are the national bank CD rates from the bankrate.com website

1 year 3.49% non qualified money

1 year 3.22% IRA CD rates

5 year 3.87% non qualified money

5 year 3.68% IRA CD rates These rates are not very attractive. Would you like the opportunity to earn a greater rate of return and do it safely?

Periodically I like to report on high interests rates available for savers. I do this to keep you aware of viable and safe options.

Multi year interest rates best deals this week

3 year fixed rates 4.37%

5 year fixed rates 5.46%

7 year fixed rates 6.1%

10 year fixed rates 6.36%

All of these financial products offer you protection of principal and guaranteed interest rate.

Rate change weekly and minimum initial $ amounts apply. Unlike bank CD rates it does not matter whether you commit tax qualified or not tax qualified funds. These products may not be available in all 50 states and the District of Columbia. Contact us to find out if they are suitable for you in your particular situation.

The second set of interest rates look more interesting to us. What about you?

How can we help you achieve your financial goals and objectives.

polarisfinancialservices@gmail.com

www.columbusfinancialplanningpros.com

Current rate guarantees

Periodically I provide updates on current high interest rate available on products offering protection of principal and multi-year interest rate guarantees.
$15,000 + 5 year fixed term guarantee rate 5.65%
$100,000+ 5 year fixed term guarantee rate 5.75%
$100,000+ 10 year fixed term guarantee rate 6.11%

Other products for clients over 40 years of age saving for retirement offer 6% or even 7.2% increase in Income Account Value when used for creation of lifetime income.

Products may not be available in all states or may not be suitable for every saver. The only way to determine if they are suitable for you is to contact us. These rates are subject to change until funding is completed. How can we help you plan for your financial future?

www.columbusfinancialplanningpros.com
polarisfinancialservices@gmail.com

Why Tolerate Low Current Yields

In Jan 2009 Social security payments are increasing by 5.8 % Remember that this is linked to partially compensate for the general inflation rate. It is not designed to increase the spending power of SS recipients. This means that the inflation rate is actually higher. When we look at the government Consumer Price Index data there are several possible numbers for the past
12 months they range from about 4.5-7.6%. Lets take a mid point at something like 6%

Now lets consider some current Yields on Traditional safe money Financial products
6 Month Treasury Bills Currently paying 1.44 %
30 year Treasury Bonds Currently paying 3.96%
10 year Treasury Bonds Currently paying 3.66%

This weeks Average Bank Cd yields
6 Month Bank CD---------Currently paying 2.17%
1 Year Bank CD ----------Currently paying 2.70%
5 Year Bank CD ----------Currently paying 3.46%

Investment in any one of these products means that you have less buying power than when you started at the beginning of the year.Even with the highest yield you will still have 2% less purchasing power after you hold the product for one year.

John Waggoner wites for USA Today . His article titled "Whats so great about Bonds? They Are not Stocks" appeared in todays paper. It is a nice overview of Bonds and how they work and why the are different from Stocks. He quotes numbers from Morningstar about this years performance averages. Short Term Bond Funds have lost 3.5%,Intermendiate Term bond Funds have lost 6.4%, and Long term Bond funds have lost 12.3% this year. Junk Bond are down an average of 22.8%.All of these numbers are quoted from Johns article. he also makes a point that when stocks do poorly bonds often do better.

The Ideal Safe Money Financial Alternative products Must do two things. They must protect your principal from risk and also has to have the chance to beat inflation!! Do any of the products listed in this article do both? There are other thing the Ideal Safer Money Financial Alternatives should do as well. They should have a minimum guaranteed rate of return. They should be able to participate in strong economic growth cycles. They should help insure potential lifetime income streams that you can not outlive.

Smart Retirement Options

There was an article in the Columbus Dispatch yesterday about managing your retirement assets. It was titled "Panic Is A Mistake In A Bear Market" The author is Mark Miller. He recommends sitting tight through a bear market. Although panic is not a good thing taking steps now rather than waiting may be a smarter strategy to implenment to insure your financial future. He identifies a problem made by many people with their retirement assets. He says that many people were overly aggressive in their asset allocation with some having 80% or more of their retirement assets invested in stocks. and not enough invested in financial products offering more safety. He shares some general wisdom when he says people should reduce their holdings in stock as they age and approach or enter retirement. He basically only talks about two alternatives Stocks and bonds. Stocks offer tremendous upside potential as well as awful downside risk, Bonds generally have less upside and may counteract modest market declines, Treasuries offer modest rates of returns and when they run out of money they go and print more, Banks offer miserly low rates of returns that may not beat inflation and offer no upside potential.

This is where I strongly disagree with his philosophy. He ignores Safer Money Alternatives. He does not say he dislikes them but he just does not even bother to mention them. Maybe he does not understand them and what they can do for any individual. I believe there is a logical place in every portfolio for Safer Money Alternatives. Young savers might start with 25-30% and increase the percentage as they age reaching 50% in their 50's, 60% or more in their 60's and as much as 70-80 % later. You need to always keep some liquid assets for future needs.

Safer Money Alternatives: How do they work and what do they do? They must offer protection of your principal. They need to provide some measure of income guarantee. They need to allow for upside potential to capitalize on improvements in the market conditions. You must have the possibility of growing your purchasing power after correcting for inflation. Some of these products pay you a bonus of 5% or 10% when you purchase them. All of the money you commit immediately goes to work earning interest and growing for you. Some of these products even allow you to create a Lifetime Income Stream that you cannot outlive. There are financial products that can do all of these things in the same product. If your current financial advisor has not told you about them are they really looking out for your best interests or retirement assets? Perhaps its time to talk to an advisor who will look out for your financial interests.

Back to the article. He asks what if you sell the stocks and invest in Bonds. You only have a 5% chance that your assets will last 30 years in retirement. That is the result of relative safety but low rates of returns. He Says if you keep the stocks in the portfolio only withdraw 4% or maybe less of your portfolio value per year your chance of having your assets last 30 years increase to 89%. Thats pretty good. Now look at the numbers if a portfolio is worth $100,000 you get $4,000 per year maybe for life and maybe not. Is there a better way? I think there is! I can help you sleep better at night and improve your cash flow in retirement, in the process. Lets take a 60 year old retiring at 61. Give me the same $100,000 to manage. At age 61 they can have an income stream of not $4,000 per year like the stock and bond balanced plan, but an increase in annual income of $1,200 dollars more, for a total of $5,200 per year for the rest of their life Guaranteed! Which sounds better to you? $4,000 per year maybe for life, or $5,200
per year for life! what if you retire at age 65? The great news is it only gets better with age!
Retiring at age 65 increases the annual income to $5,720 per year. Want more income give me more assets to manage or give me more time to grow your assets. For example at age 55 give me $100,000 to manage and retire at 65 you will have at least $200,000 in Income Account Value guaranteed and you will be able to take over $11,000 per year in income guaranteed for your life!!

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