Corporate bonds are riskier than Treasury securities. The reward for accepting this risk is larger when spreads widen, but may be less than investors expect when spreads are modest.
We compare fixed annuities to other safe investments, such as CDs and Treasury securities, to better understand whether they provide attractive risk-adjusted performance and are a reasonable alternative for risk-averse investors.
Variable annuities were created to give retirees access to lifetime income with the potential for growth. Today’s products offer a range of features such as liquidity, investment risk hedging, access to a risk premium, tax deferral, and longevity protection. This panel address the tradeoff of these product features and when they provide the greatest value to retirees. The best variable annuities offer reasonable-cost options that provide income, investment flexibility and downside protection when clients need them most. CFP and IWI CE credits pending.
Market crashes, such as we experienced in March at the onset of the pandemic, drive assets to the safe haven of government bonds. But our research shows this flight to safety mindset did not translate to an increase in demand for annuities.
Care to guess how well the monthly CAPE predicted future 10-year returns between January 1995 and May 2020?
The way to get people to think about death is to imagine that by doing so they will never die. Recognizing this universal character trait will lead to more productive planning outcomes.
The market’s response to the coronavirus had a stark effect on portfolio values. Less apparent, but more important, was how it reduced the probability that your financial plans will succeed in reaching your clients’ financial goals. Here’s an example of how devastating that may be and how you should communicate this to clients.
Most of us view our investment portfolio as numbers on a screen. However, investments represent money that we set aside for some future purpose or goal. Are we investing with that goal in mind?
I will show that an eminently effective way to fund retirement is through a deferred-income annuity, particularly if it is purchased through an IRA as a qualified longevity annuity contract (QLAC). The advantages of purchasing a QLAC include the ability to avoid RMDs.