If you’ve followed the “traditional” financial planning route, it is likely that as the years go by, your advisor has shifted your portfolio from riskier, growth-oriented investments to “safer,” conservative options.
Unfortunately, though, as a “tradeoff” for keeping your assets safe, you oftentimes have to give up the opportunity for attaining a higher return. Take, for instance, bonds. The price of these investments has an inverse relationship to interest rates. So, when one goes up, the value of the other goes down, and vice versa.
In the decade since the 2008 economic recession – when interest rates were at all-time lows – yields have increased. But they’re still nothing to cheer about. Plus, these interest rate hikes have driven down the price of bonds. So, as newer, higher-interest rate bonds have become available in the market, the value of lower-interest bonds has continued to fall, similar to a seesaw.
And honestly, we don’t think that’s very fair.
What Do Warren Buffet and Your Retirement Income Have in Common?
Warren Buffett, the man considered by many to be the greatest investor of all time, doesn’t believe that this is fair, either. So, he decided to do something about it. In his company’s 2017 shareholder’s report, he noted that the bonds in his portfolio were only selling for 95.7% of their face value. This equated to an annual yield to maturity of under 1% – a figure that doesn’t even come close to meeting, much less beating, inflation, and that can essentially wreak havoc on keeping purchasing power on track over time. So, in order to make good on a financial promise that he had made a few years prior, Buffett sold the bonds at a loss, and instead took on more market risk in hopes of making up for the shortfall. But, while Warren Buffett can afford to lose a few bucks if the market goes down, most regular investors can’t afford that luxury. That’s why many people are turning to fixed indexed annuities – financial vehicles that provide the opportunity to obtain market-linked returns, while at the same time keeping principal safe in the event of negative performance. Because there are no losses to make up for, a fixed index annuity can provide a great alternative to a risky stock portfolio, as well as to low-interest bonds. These annuities can also pay out a stream of guaranteed lifetime income in retirement, no matter how long you may need it.How to Determine the Best Retirement Income Strategy
If you were shopping for a new car, an expensive home renovation, or a high dollar computer, it’s likely that you would spend some time reading reviews and checking out what the experts have to say about the various options. So, why don’t most people spend at least some time searching for the retirement income strategy that best matches what they’re hoping to achieve – and that can have a direct impact on your future lifestyle, and your life? We don’t know, either! But we do know that thousands of consumers have come to our website throughout the years to read the in-depth annuity reviews that we have posted there. These reviews delve deep into the good, the bad, and yes, even the ugly as it pertains to annuities. Just like any other financial vehicle, though, an annuity will only be good for you if it helps you to achieve your specific financial objectives. That’s why it’s always recommended that investors do some comparing before making a long-term commitment to an annuity. Otherwise, if you find out that your annuity isn’t performing the way you had anticipated it to, you may incur some substantial surrender fees. This is where the Annuity Gator comes in. We make shopping for the right annuity easy and convenient because we’ve done the research for you. While you could read through a plethora of fine print (and we certainly recommend that you still don’t skip that step), our reviews can help you in determining which annuity – if any – will work for your personal situation. If you have any questions about a specific annuity, or even about annuities in general, feel free to contact us directly by phone at (888) 440-2468, or via email through our secure online contact form to schedule a time to chat with an Annuity Gator research specialist.
