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Annuities vs Market Volatility
Hi there, Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Boy, today's topic is a good one. My director and all the smart people in the room were like, "Stan, don't yell. Please don't yell for this topic." Why? Why did they say that? Because the topic is annuities versus market volatility. Now, some background: I worked for Dean Whitter, which became Morgan Stanley. Then I went to Paine Webber, which became UBS, Union Bank of Switzerland. So, I've been on that side. I was in the marble offices and wore the suit. Man, I look good in a suit. Double-breasted, I was sharp. Now I'm doing the warmup stuff, but I've been there, I've done that. I understand the markets.
The reason that I'm Stan The Annuity Man. The reason that our whole saying is "You own an annuity for what it will do, not what it might do" is I am out here talking about annuities the way they should be talked about, in my opinion. These are contracts, and we're looking to solve for contractual guarantees for people who are going into chapter two of their lives, which is typically retirement. But we're going to talk about annuities, market volatility, and some of the things you need to know to make good decisions. Annuities might not be for you, and that's fine. You need to understand what they solve for and how they might work in conjunction with your market products and enhance them. How about that? Let's get into it.
Do You Need an Annuity?
All right, full disclosure, market volatility I'm not doing the market stuff anymore. I sell Fixed Annuities. There are many different types of Fixed Annuities. MYGAs, Indexed Annuities, SPIAs, DIAs, QLACs, I mean traditional Fixed Annuities. There are all kinds. We sell contractual guarantees only. But market volatility, I think if you're getting older and are going toward retirement, you probably want to lessen that exposure to those volatile markets. With 13,000 people turning age 65 at the time of this blog, those people are trying, in most cases, to transition some or part of their portfolio that's attached to the markets to contractual guarantees. Now, annuities solve for four things. Principal protection, income for life, legacy, long-term care confinement care, that acronym is PILL. And if you need to solve for one or more of those items contractually, then an annuity type could be for you.
What I would tell you to look at if you still want to remain in the markets, I have nothing against that. Nothing. You can't go all in on annuities; I'm the first to say that. A lot of people don't need annuities. But you can put your income floor in place using lifetime income and combine it with the annuity you already own, player, Social Security. It's the best inflation annuity on the planet, to combine with that, and if you have a pension, if you're so fortunate with your employer, so that an income floor is in place, so you don't have to disrupt the stuff, the investments you have in the market. That's the way that annuities can combine with and enhance your market strategies. Now, you might be the person out there who wants to go all in on the markets; you know how to manage it, or you have a very good person managing it for you.
Go for it; knock yourself out. But for the people out there who want that stability and security with at least a portion of their portfolio, you can do that. You don't have to buy lifetime income products. At the time of this blog, you can lock in very good contractual yields, sound MYGAs, Multi-Year Guarantee Annuities, which is the annuity or the annuity industry version of a CD. You can lock those in, peel off interest, and never touch the principal. You can do that or let them grow and compound tax-deferred; that's your call. So, there are many different ways to do that, but it's a transition for people to go from all into the markets to transitioning out of the markets.
Client Example
It's just that FOMO, Fear of Missing Out. It's hard. It's hard to take money to the sidelines when you're always looking for what they call, in the business, a ten-bagger. You buy it for $10, and it goes to a hundred; hindsight's 20/20. But the older we all get, the less of that market volatility we probably want. I mean, that's not a saying for everybody. There are some people out there that, and I got a call the other day. The guy was like 81 or 82. We went through the conversation, and his market stuff was doing good. He understood it. He was very good at it. And I said, "You know what? You really don't need an annuity at this point in time." If it ain't broke, don't fix it, as they say in the South. Typically, I go off on the market volatility part of it, and the reason that I go off on it is because some sales pitches in the annuity industry will promise, unfortunately, and I don't know if it's fraudulently that you can have the market and protect the principal.
Don't Be Gullible
You cannot. If it sounds too good to be true, it is every single time. If someone says you can get market returns and protect the principal, it's not true. I don't care what they're saying. I don't care about any of that because I know, I was around. Typically, that's a sales pitch attached to what's called a Fixed Index Annuity. Those are CD products. They were put on the planet in 1995 to create CD returns. And guess what? Since 1995, they have, but that's not how they're sold. They're sold as have your cake and eat it too. Forget market volatility. We can strip all that out and you still get the market return until you get the principal protection. Do not be that gullible please. Don't fall for that. That's just a sales pitch, and they want you to buy something.
It doesn't work like that. Index Annuities are great products, but they're CD products. Nothing more than nothing less. And there's another CD product called a Multi-Year Guarantee Annuities that, at this time of this blog, is a better choice for you. Even though the agent and the built-in commissions are so much lower that everyone at the Bad Chicken Dinner Seminar circuit is trying to pitch you an Index Annuity. It is a high-commission product, but that doesn't make it a bad product; it's a potential product. You buy annuities for what they will do, not what they might do, and those are might do products. Buy the will do is buying the contractual guarantees.
So, when it comes to annuities and market volatility, look at the balance you can put in place. And like I said, I believe from looking at both categories, using the annuity part to protect the principal and/or creating a lifetime income stream and enhancing that income floor in combination with Social Security. You'll be a better investor because you don't have to disrupt that money in the markets to create income. You've got the income that's coming from Stan The Annuity Man, America's annuity agent licensed in all 50 states, with the top annuity YouTube channel on the planet, and growing every day. Thank you so much, and we'll see you on the next Stan The Annuity Man blog.
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