Episode Transcript
[00:00:00] Speaker A: Hello and welcome everyone to the Annuity Straight Talk podcast. I am your host Brian Anderson, founder and creator of annuitystraightTalk.com dot, coming to you from Tucson, Arizona. Last podcast here. I do believe I'm leaving in a couple of days. Been an enjoyable trip. Looking forward to what lies ahead for my summer in Montana and always willing to help everyone out. If you have any questions, you can contact me by hitting the schedule a call button on the top right corner of any page on annuitystraighttalk.com. Please like subscribe or comment on any of your favorite podcast platforms or on YouTube. Share the page and the information. It helps people out. People like it. Answering a lot of complicated questions. I think this is probably my favorite backdrop that I've had in Tucson. I got the Catalina mountains. I'm on the west side of town, that's on the east side, but that's in the backdrop. We're talking about an interest rate update in 2024. Constant topic, constant concern for a lot of people. And I'm here after 21 years in the business to to help you rationalize what's available today.
It's interesting that I've said this a lot. Anybody first looking at annuities now has no idea how good they are compared to what they've been in the last ten years. More than two years ago. You got, and I've got contracts that are active from that time, more than two years ago. Products and possibilities are 50% more lucrative, whether growth or income at the very least, and some of them even more so. So this topic of interest rates, where they're going, everybody's concerned about inflation and all that stuff. Gonna try to rationalize it and talk about what I did a year ago, six months ago and all of that stuff. It's interesting to me because I have always done deep dive, deep studies on interest rates and every time I go really technical on it, it doesn't get a whole lot of traction and nobody really reads it, aside from the more technically minded, astute followers that I have. So I try to cater to that as well as just the general information that you need. Many of you will remember that I do have an incredibly strong internal contact from a interest rates, a swaps trader on Wall street over the nineties and early two thousands who gives me a lot of really good technical information that oftentimes goes over my head. So if it goes over your head, I don't blame you.
But trying to figure out, and the reason I do this is because I'm trying to figure out when someone calls me how to help them make the best decision they possibly can given the tools we have to work with today. So we gone into predictions and all this stuff and I want to let you know, and a lot of you do, but you got annuity sales guys. It'll be, well, this bonus is only here for a short period of time or act now because the rates going to drop soon. I have done a little bit of that, just to be fair and to be honest, but that's not how I operate traditionally and not something that I stand behind as a mode of just selling as much as possible. When rates were in the toilet, I sold things only because I needed to. I made almost no money that year.
And the point was to tell people at the time, take your time, don't rush into anything and get the best deal you possibly can. So explain interest rates and how they relate to you. Now. If you're buying a house and slapping on a 30 year mortgage, interest rate sucks right now. If you are buying a long term income product or an accumulation annuity because you want safety and a long term guarantee, things are really good. I go back to the early part of last year because we had seen in 2022, rates started to rise and everybody got the feeling that oh my goodness, hyperinflation is here now. Inflation is a part of the economy right now. And it did Spike. But did rates go out of control? And I said they weren't going to. They didn't. I told you in that podcast, will rates rise in 2023? I said no, they didn't. I also kind of predicted they would drop, but I said best case, they were going to stay about the same. That's essentially what they have done. Now we get the ebb and flow. They dropped a little bit toward the end of the year. At the end of 2023, podcast rates are dropping and a 2023 recap, they fell back. They have now risen again.
So we've got the Fed actions, we've got the overall economy, the supply and demand of different products.
You have to understand that all those things are working and you need to put blinders on and focus on what your goals are in retirement. Analysts are going to say all sorts of things. We've got, I wanted to do this a few weeks ago or a month or two ago, but I've got my, I call him my insider. He's just a really smart guy who made a pile of money trading interest rates. He's the guy I talked to.
That's one of the, what I consider a blessing in my life, just have his friendship. And he's been a little under the weather, didn't feel up to it, so I don't want to use his time. Looking at rate spiking last year he was one that said, oh yeah, we could see a ten year treasury go to 7%. He didn't necessarily believe it, but at the same time, analysts were calling for interest rate cuts and all that stuff. What's interesting, if you look at the headlines today, it would have been a different message if I recorded it yesterday, but I'm doing it today.
You don't need to know when today is because the point is, I'm telling you not to pay attention to it. We'd already seen rates rise last year and everybody thought, oh my goodness, we're going to go back to, because everybody retiring now understands that rates were two, three times as high in the eighties.
And I think now I never saw that. I guess it affected my life because that's when my dad had a farm loan when I was a little kid. We have to rationalize it and realize that when you're talking about annuities and interest rates and solid retirement planning, you got to make the best choice you can for the rates today. And the point of doing it is that you don't speculate on what's going to happen if you get into a contract that's paying you income for three years and all of a sudden rates are a little bit higher. Well, you've already pocketed three years worth of income, so it's a negligible effect, increasing rates, because you would have thought you would think about waiting to get it and waiting to get more money. So it was interesting last year we thought the run up to rates was going to lead to higher rates. That's what a lot of consumers and a lot of the people that talked to me thought. Where I had this time last year, analysts were thinking that, well, it's going to stall the economy. I even said it in the podcast where the Fed's goal was to induce a recession so that it slowed things down a little bit to calm inflation. Inflation is the target. It has leveled off. So they say, you guys can tell me what you think based on the money you're spending for the normal necessities and all the other stuff that you have going on in life. I think prices have probably about leveled off. I'm in Arizona again. I drove here the second time. Fuel prices were, I don't know, 20% less this year than they were last year. So is inflation still bothering you? You can tell me what you think, but I don't notice the price increases like I did a year ago. So this is kind of almost an apology as well, because I don't want to get into fear mongering or talking about what's going to happen, what's going to go down. Now, we've had a recent spike in interest rates. What's interesting is when the rates climb, the market drops. It's supposed to go the other direction. Market drops, rates drop. So then you get a bond portfolio, increases in value. As your stock portfolio drops in value, they're supposed to offset and balance each other. But right now we're working a different environment, and it has been that way for the last year and a half probably, and that is understand that's an anomaly. So your traditional stock bond portfolio has not been working in the past couple of years. So it takes a different approach. I talked to a guy this morning. I met him first in 2015, nine years ago, I told him to replace his bonds.
He's been in bond funds, he's been doing it himself, 81 now. He was 72 back when he was a spring chicken. In 25th 2018, he took a big hit in the bond funds, and he's taken a big hit in the past two years. He's got a bond portfolio that's gone nowhere. You talk about fixed annuities, index. Annuities could have grown. That would have at least grown by two, 3%. Not lost value would have been way ahead of the game. Did what I said. I looked up our old emails. I said, man, I told you to get out of the bond funds nine years ago, and he still, that's the problem.
Right now, he's 81.
Maybe an annuity is not the right fit. Go to a money market fund, get a good fixed interest rate, plan your next move and wait. Those are not guaranteed to stay in the same place.
Money market funds may be paying 5% right now. The annuity allows you to lock it in longer. He's got to have a longer term perspective and a long term goal that provides for. So his best bet is to liquidate the bond funds. He doesn't have to deal with the fluctuations in the market. That's, I guess, an individual case study. But I've been talking about this for a long time. What you want in retirement is you want consistency for a portion of your assets to provide for the necessities you have. My best case last year is I thought rates would stay about the same. And that is exactly what happens. What has happened. And that's what I think will happen right now.
Do not get in a hurry. I'm not going to fear monger. I do not want the market to drop. The stock market. I do not want rates to drop. I love what I have to work with because we're delivering really good deals to really good people. And a lot of guys out there are very happy with what they're getting. They're getting really good investments and guarantees that are going to span their lifetime. And that is awesome. You can't imagine how good it feels to be in this business for 21 years and to be able to deliver that peace of mind and happiness for people. And that's what I'm trying to do. Do not get in a hurry. I'm not going to sit here and say, oh, get out of the market. Stock markets, you decide when you want to get out of the market. I mean, it's up, it looks good now. Handful of stocks look incredible incrementally. It's a little bit higher than it was at its peak two and a half years ago. I think it's kind of a scam. You can do what you want with it, but go ahead. I'm not like, I hope it keeps running because all the index annuities I sold, I want everybody to get good returns on those products. For every one person that would learn their lesson by the market correcting. I've probably got ten or 20 or 30 people who are going to be happy because their index annuities made 1015 percent. I'm on your side with this and I want everything to go really well. Interest rates, according to my expert, are going to be sticky at this level. Now understand, he's a professional trader. So when he talks about rates being sticky, he's looking at a two, three month time period. I've listened to him and done some investments in the past. He said, oh, this is really good investment. By that he means maybe for the next week or two. And then he's going to get out and he's going to pivot and he's going to do something different. Most people don't understand what it means to be a professional trader and make money in the markets. That's the problem.
You want to be sitting ducks in the market and go long, long position Ken Fisher and all that stuff, and you'll probably be okay. But to do planning income, planning consistent withdrawals, you have to have a different mindset if you're going to stay in that business. That's what we do is we remove that question from people.
So when my expert, the guy that I trust and know, says they're going to remain sticky, I'm going to have to ask him that again in a week or two because his position is going to change.
I don't want my recommendations to change, but I'm going to tell you this right now. Take your time in making a decision because rates are good. They're going to stay about like this. Do not expect them to spike terribly high. I hope they stay this way and focus on your goals and doing what you need to do, protecting what you want to protect, producing what you want to produce. Get it guaranteed, whatever extent you possibly can. And do not worry about what interest rates are going to do or what the overall economy is. Once you stick it with an insurance company, you get it guaranteed. That's going to be the safest, surest bet you've got in your portfolio.
So if any of you guys want to talk about this at a greater extent, you can get on my calendar. Top right corner of annuitystraighttalk.com. Schedule a call, hit the button.
Name, phone number, email.
Give me some notes about what you want to talk about. I am so grateful for everyone and the feedback I get and the case studies. I've got a whole list of topics lined up. Finding the motivation to do that, getting ready to go home to Montana. Probably stop in Colorado to see my sister next week and we'll do a podcast, kind of a legacy podcast to do in her living room, but got to do it and but go ahead and get on my calendar. Please like subscribe or comment on any of your favorite podcast platforms or on YouTube. Tell me what you think. Give me your feedback. Tear me up. Disagree with me if you want. I love a good debate. I love a good conversation and I'm here to help you no matter what. Do not get pressured into doing anything. This has been episode 133. My name is Brian Anderson. I will see you next week for episode 134. You guys have a great day.
[00:15:06] Speaker B: You have been listening to annuity straight talk.
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