My Apologies – Kind Of
You might notice that this edition of our newsletter is our April/May edition. You might – quite rightfully – ask why two in one? The answer is actually quite simple. April was one incredible month – packed from the 1st through the 30th. Writing my newsletter kept getting bumped for some other ‘priorities. When you see the reasons, I think you’ll forgive me.
Mark and Lisa Get Married!
As part of our More than Money family, please help us all celebrate the wedding of these two remarkable and love filled people. We have loved Mark for as many years as he has been with us. We have loved Lisa from the first time Mark introduced us to her. Their April wedding was a celebration of love. Surrounded by their families and friends, they exchanged vows and there wasn’t a dry eye to be found. As all good men hope – Mark married way over his head with Lisa. Their now blended families bathe them in a great pool of love. When you have the opportunity, please congratulate them.
April 18th – Tax Deadline #1
Tax season came to close #1 (extended returns have until October) on April 18th much to the relief of our entire tax team. This made the first three weeks of April a mad cap comedy scramble (says no one ever!) Led by Diane (if that is her real name), Sue, Stephanie, Tammy, and Melissa, these ladies completed an immense number of returns this season. If you are a tax client, you know how very diligent this entire team is to provide you with the best tax result (legally!) possible. When you have the opportunity, please thank them.
More than Money Gets Called to Savannah
Savannah called indeed! The last week of April was consumed by a long-planned trip for our advisor team to Savannah, Georgia. We (Mark, Alyssa, Chad (and his wife Angie), Greg, Daryl, Jon, Megan, Diane, and me) attended the national conference of The Strategic Financial Alliance. If you are an investment client of MtM’s you may have seen SFA on paperwork or reports. SFA has been MtM’s strong partner in serving our investment clients for nearly fifteen (15) years. Within the SFA are some of the finest people you might ever wish to meet. We have made wonderful and valued friendships with both our SFA partners and SFA advisors. All these outstanding people share a common bond – we are all committed to serving our clients (you!) at the highest and best level we are able. This generous community shares their best ideas with us and we bring them back to serve you even better. And along the way we share some pretty valuable ideas with them as well. It really is an amazing opportunity to grow.
“Real Life Questions – Real World Answers”
“My parents bought my youngest sister, 30, a $900,000 house to run a drug-rehab center. She does pay him $5,000 a month rent for this investment. My sister and husband are former addicts who have cleaned up their lives, and are doing much better for the most part. My dad is of sound mind, but it’s shockingly unlike him to give anyone money, especially $900,000.”
Wow – there’s quite a lot to unpack in a very short question.
First, I fail to see where any of this is your business. What your dad (being of ‘sound mind’) does is most certainly his own business.
Second, what your sister and her husband do (‘better for the most part’) – your judgmental statement aside – is none of your business. We do pray she and her husband stay sober and help a lot of people.
Last, your dad is quite apparently of sound mind since he did not buy your sister a house. He bought himself a house and is renting to her. And, to be fair, $5,000 a month is a pretty hefty rental. And dad has himself a solid investment asset – likely to go up in value over time. Dad is doing just fine.
Which leaves you. Keep focused on the things you can control in your own life and less concerned about people you cannot control in your life.
“I have been an aggressive investor all my life and it has paid off handsomely. I retired in December at 63 and am being advised to balance my 100% stock portfolio with bonds and other more conservative investments. I have been leery of annuities my whole investing life as I’ve heard many negative comments on them. I went to a SSA seminar and the financial adviser was suggesting an indexed annuity as a conservative investment. He said that bonds are no longer the flip side of stocks and that this annuity type should be considered as an alternative.
The 2022 bond performance seems to back him up. As he describes it, you can never lose your principle or any gains you have realized. If the index such as the S&P goes up you don’t realize the full gain but if it goes down you don’t realize any loss. Can you provide your thoughts on these investment vehicles?”
Investment vehicles are simple tools. The appropriate question is whether a specific tool (investment option) helps you reach your financial goals or not.
In your case, we don’t know what your investment goals are. If, in your retirement, you expect to need cash flow generated by your portfolio to help you pay your bills, be happy, and healthy – bonds or bond alternatives are quite important.
If your retirement doesn’t depend on the income generated by your investments, then you can choose to invest in nearly any way you wish – including staying aggressive throughout the balance of your life. At MtM Financial we’ve had quite a number of investors over the years who have stayed aggressive investors into their 80’s and even 90’s. In their cases they did not rely on their investments to pay bills, but rather were – in effect – investing for their children and grandchildren. And – icing on the cake – they really enjoyed the aggressive investment ride.
Of course, an indexed annuity might serve as a bond proxy of a sort. In general, indexed annuities have some conservative advantages and some drawbacks (of course). Over a long period of time, they have the potential to produce bond like returns with controlled levels of risk. Of course, the same could well be said at this current moment about Certificates of Deposit (CDs). With short-term rates (as of this writing) centered on the five per cent (5%) interest rate CDs might well serve a similar bond proxy function without tying your money up in an illiquid annuity.
In addition to CDs there are a fair number of investment options that would appropriately be considered to be bond proxies. Before selecting a fixed index or any other type of annuity be sure to become educated on the full spectrum of options to determine which, if any, fit your needs.
You have been leery of annuities and have heard negative comments over the years. Unfortunately, many annuities and annuity companies have earned their poor reputation for high commissions, long lock-up periods, high surrender charges, etc. Fortunately, many annuity companies have evolved into providing products that are significantly improved and, in many cases, provide clients with outstanding benefits. It is very challenging for an average investor to tell the difference. Certainly, a free dinner seminar is not the way to go.
If you are considering an annuity you should work with a holistic financial advisor who will match your investment needs with your financial goals. Such an advisor should be licensed and experienced to provide you with whatever investment option(s) (annuities are often sold by insurance licensed only salesman who cannot offer you any other investment options) fit you best. Many Registered Investment Advisors (RIAs) could fit this description. Many RIAs are also fiduciaries who are committed legally and ethically to act in your best interest.
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