Episode Transcript
[00:00:00] Hello and welcome everybody to the Annuity Straight Talk podcast, episode number 176. My name is Brian Anderson, founder and creator of AnnuityStraightTalk.com whether you like it or not, I'm right about a lot of things and annuities aren't a bad deal. And we're going to talk about one of the things I said in the past today. But before we do that, please like subscribe or comment on any of your favorite podcast platforms are on YouTube. If you got a concrete disagreement with me, go ahead and share it, reply, give me an email, something like that. I don't have a whole lot of time for just random phone calls these days, so appointments are better, but don't be a jerk about it. Who cares? Not everybody has to agree with this. But like I said, I'm right about a lot of things. So I'm going to talk about. Two years ago I wrote a newsletter, recover market Losses with this annuity. So why don't I share the screen and we'll go into that and this is just a checkup on an update to see was I right or not. This is gonna come down to maybe proving a little personal preference of how again we're all trying to get to the same place we want to be successful. How do you want to get there is the question. And this is the new one right here and it's index annuities versus the stock market, a two year check in. So if you want to look back on what I've said, see if anything needs to be corrected or updated. It happens a lot because times change. A lot of you guys will know I've been pretty consistent.
[00:01:23] And when things change dramatically, offer clarification on whatever topic it is. Because economic conditions change. One of the biggest things is several years ago I wasn't, I never liked the guaranteed income riders because the payouts were really low and I advised everybody to stay short term. And it worked out really well because then now we're a lot of people are doing the income riders because the payouts are so generous, nothing can compete with them. So if you haven't re looked at that for from maybe a standpoint of not liking annuities, look at it again and you'll see it's dramatically different. Makes an amazing difference in a portfolio.
[00:02:03] But almost two years ago, and almost exactly two years ago, nearly to the day, everybody was lamenting the quick correction in the market that came off the S&P 500 all time high beginning of 2023. By October of that year so throughout the years, it had settled to a low point where those. That was more than 22% loss from the top. And I know one of the sentiments I've heard from a lot of people, and it's like, oh, this can't keep going, can't keep going. And every time they get one of those corrections, and that one was a little bit longer because it was eight months. The one we're in now, who knows? Any day it could change. But everybody was bummed out about it, and it climbed back in a big way. But that whole time, everybody I'm talking to, and I'm talking even investment professionals, whoa. I don't really know where it's going. And it doesn't matter. You're buying a hold investor. You can stay in the market and just, hey, it's gonna rise over time and no big deal. But if you're in the income distribution mode, that's where you can actually prove that annuities and stability in the portfolio will help. Bonds don't quite do it, cash doesn't quite do it. And it's the best fixed income asset, the most aggressive payout. I've thought about maybe going back in time and doing like, all right, let's go over all of the reasons why an annuity might be benefic. Will be a long podcast, but I might do that for the new people and a reminder for everyone that's been around for a while. So we're just gonna go. This one is specifically back what I said two years ago. Everybody wanted to protect the money.
[00:03:30] The market was still down a little bit nervous about which direction it was going. And a lot of the one thing I've seen, noticed, and even recently was like, a lot of people like to see this. They see the top of the market and all of a sudden that's their bottom line. As if everybody always gets in and out at the right time. Never happens. So I said, here's just an idea. Here's a fixed indexed annuity might be a good way to recover the losses if you don't want to risk losing more. So on April 28, 2023, the S&P 500 was at 43.69, and it was still. It was 13% down from the previous record of 4,725. I'm going to show you the S and P now real quick. So two years and four months into it, that's a 55, 25, which is the closing on December 25th. So you've got about 16% in yield in two years and four months. That's good, but it's not incredible. And of course, that's a pullback, a serious pullback from what it was at the top, which was pretty incredible anyhow. So when the S and P was at 4369 at the time, a fixed index annuity with 10% annual cap would have put the person in a position to completely protect the value at 43.69. If the market advanced in the next year, then the cap would have provided enough yield to lock in a return comfortably over the previous high that everyone was worried about having lost. So you could have done the whole thing all right. Then when the market goes higher, it's like, oh, but I should have had all of it. So about a year ago, the s and P500 closed at 5099, confirming the 10% lock on a fixed indexed annuity that would have been purchased in 2023. Friday, the S&P 500 closed at 5,525, which would have locked in an additional 8.3% interest.
[00:05:21] That money cannot be lost, and you will never pay a fee for the protection. If that's only a part of your portfolio, then you're doing just fine. We're not talking about all of the portfolio. We're talking about part of it. So you'd have been 18.3% interest up over two years, and I call that pretty solid. Maybe not as good as the top top, but then you didn't have the worry and the stress and the ups and the downs. It's not your money until you sell it. It's all on paper.
[00:05:49] Now, you can argue, and people will argue with me about the best way to maximize yield on assets, but you can't convince me that it wouldn't have been a good deal. That deal was just fine. Never suggested anybody put all their money in one place. And I know for a fact that most people never get all of the top returns in the market. I know a lot of people that were still languishing around that 20, 23 high.
[00:06:13] And that comes into, like, bond sides and the yield on bonds and the. And a lot of people are in bond funds, so they're buying and selling. You got fluctuations in value on that.
[00:06:24] Then if you didn't have. If you had a pure index portfolio, you're probably okay. But if you had it concentrated in a certain. In certain sectors that maybe didn't include the top, the big seven, all the AI companies, nobody seems to like what AI is doing, but everybody likes participate in the returns. So I do know people that have never come back from maximum portfolios in the past. Not the people I work with, people I talk to. I only end up working with about 5% of the people that make appointments with me. But I hear, hear news from all over the place. And on the other side of it, I know guys who are true professional traders who have generated astronomical returns. I'm talking five, six, seven times their portfolio value in the last two years. That's what you're up against. You're up against guys that can do that. But these guys are pros on the inside. So I have a lot of connections on both sides of it. People who are really conservative, people that know how to be aggressive intelligently and I run my ideas past them and what I'm doing and they all agree that stability holds value and nothing does it better than the right annuity. One of my best buddy who's a trader, he's been sniffer, he's like, you know what, maybe I should buy an annuity.
[00:07:35] And I just, I tell him it's like, you know what, you're fine, you don't need it. So some are going to point out that the index annuity did not keep up with the market. But that's not, that's being rather picky. It's a safe asset. It's not supposed to. The market did go a whole lot higher and only recently relinquished a lot of the gains. Over the two year period, the market only exceeded the annuity by about 5% total return. And the annuity is going to be in good position to recover. If the market recovers and keeps going higher, the purpose of the annuity cannot be forgotten. If the market drops in value over the next year, the annuity won't lose value. And that's why people like it, because you don't lose money. You don't have to agree that it's a good place to put money, but you'll have to admit it's not a bad one either. Over the past two years, the stock market has produced the best overall yield and index annuities are likely a close second in terms of asset classes.
[00:08:24] Now, timing is incredibly important as I've seen annuities produce returns that are either higher or lower, depending on where you start and stop. But what I do know after doing this for years is that one, they're all going to catch up and level out. One thing about the annuities is I illustrated a pure equity index, the S&P 500 on this in the last few years we had, a lot of the annuities are sold on projections and guys don't necessarily do a deep dive into what you might have an index that's got a bond blend in it that got crushed while the market was going up. So the index went flat or produced pretty meager returns. It's not to say everybody did this. I know people that have done better. I index annuity that reset last year, 24% annual return. Wish everybody could do that. Yeah. And the other things you do without fees. So putting an annuity in your portfolio, if you've got asset management, then you're taking fees off of a portion of your portfolio. That's one of the reasons a lot of guys stay away from it. I talk to even a lot of the investment companies are saying no, stay in the market. No. Why? Because you gotta look at their motivations for doing that as well. They lose assets under management. Most people understand the trade off of having protection in a portfolio. Even if you know there is a trade off in terms of yield at times, annuities will always be the safest place to put money. There's three or four podcasts and newsletter, maybe five, talking about the security of the insurance industry, how it is fundamentally built in. If you don't understand that you disagree with me and disagree with me on the point that the insurance companies are the safest financial institutions in the world, then you need to go do homework. Don't get mad at me if you don't understand that I made it available for everyone. There are no fees on most annuities as well, so that's a really good benefit because we've talked about how fees will chip away and erode the value of your money. Bottom line is the deals do accept less return in exchange for protection, but continued volatility can come to favor the annuity easily. We'll see what the next few years hold and I promise I will do this again and show you where it stands. All right. I get a lot of good feedback on the site and what I post, but sometimes it's negative. People take shots of me from time to time. Really doesn't bother me because I've got years worth of work and research documented on the site. Typically when somebody comes in and does that, they've seen a few things and they disagree with what it is based on some preconceived bias. They don't realize that this is documented from front to back. I will always correct mistakes. If you guys can point something out or update information to keep this as accurate as possible.
[00:11:01] So let me know if you have something that I've said in the past that you think needs to be clarified or updated or something you'd like to challenge. If you guys can come up with some good ones that's going to make this podcast better. Because I can update information where needed and I would be certainly happy to do that. So this has been episode 176. My name is Brian Anderson. Happy to be here. If you want to make an appointment with me, go to the top right corner of any page on annuitystraighttalk.com and schedule an appointment. If you schedule it, name time, zone time, and your phone number. Make sure you're there. I'm tired of adjusting my schedule for people that don't show up. It's very disrespectful and you're only hurting the people that really do want help and want to talk about serious issues. So anyway, share it with friends, like subscribe or comment and any of your favorite podcast platforms are on YouTube. You guys have a great day. I will see you next week. Have a great day. Bye.
