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BIG CHECKS FOR LIFE?
REGARDLESS OF AGE?

KEEP READING 

 

With the market in ongoing turmoil for well over a year now, and no way of telling if the recent rally in the first quarter of 2023 will stick, the annuity option has been a hot topic here on Money Matters.

Annuities are contracts between you and a large insurance company that states the insurer agrees to pay you over a period of time an amount based on the terms stated in the contract.

There are many variations on annuities and I have covered the few I recommend for many clients in past Money Matters radio and newsprint. I often use my own annuity names when describing these to better illustrate their advantages.

Today’s flavor of the month is what I call the “Bonus Income for Life Annuity”.

Unlike Participation Annuities that give you a portion of the stock markets increase measured over time, and Triggered Annuities, that promise a minimum and specific percentage return should certain things happen in the markets, Bonus Income for Life Annuities add a bonus payment to the amount a customer puts in as soon as the papers are signed, then pay a fixed lifetime income.

For illustration purposes, I always draw on real life annuity products that actually exist when describing annuities and today is no exception.

Similar to other income for life products, the Bonus Income for Life Annuity insures the customer won’t outlive their money. The payments are for life, even if it’s over and above the amount you put in. The bonus referred to means the insurer adds a bonus to the amount you put in at the moment you open the annuity.

Specifically, in this annuity, suppose you put in $100,000.00. The day the papers are signed, the insurers ADDS 20% to what you put in and subsequently would credit this account $120,000.00 immediately.

Yep, you read that right. 20% is added to your deposit.

You can’t then close the annuity and remove 120K obviously, but the 120K is there and used to calculate your lifelong payments.

You leave the money in the annuity until the day comes that you decide to “pull the trigger” and begin your lifetime payments. The payments will then continue until you die. If you want to add a spouse or significant other, you can, which means payments continue until both of you die.

Once pulled, you cannot “un-pull” the payments which means once you decide to start payments, that’s it.

How much will you get each year?

That depends on your age when you open the contract and your birth gender. The younger the age, the lower the payments. This is because the insurer is paying you for life, so the insurer rightly adjusts the payments assuming it will have to pay younger applicants for a longer period of time.

The payments can be surprisingly large. I ran one on myself at age 67, male, and if I waited only 2 years to pull the trigger at age 69, hypothetically they would pay me 8.01% on my original deposit every year for the rest my life.

Not bad.

Wait 4 years and the payment rises to 9.44% for life and if I wait 6 years, I get an 11.33% annual percentage until the day I die.

I ran one for a 71 year old male and the yield is even higher. If he waits 3 years, he gets 9.46% APR for life and waiting 5 years nets him an annual return on his money of 11.32%. Waiting 9 years gets him a whopping 17.22% on his original deposit for life.

Upon death, what hasn’t been paid out is returned to the estate and both the payments and the returned amount to the estate can also increase as the principal is tied to variety of stock indexes.

As with all the annuities covered here on Money Matters, there is no downside risk, you can withdraw a certain amount a year if needed, early withdrawal fees over the allowed annual withdrawals may apply, and there are no medical tests or preexisting conditions that will affect issuance.

Considering I-Bonds and Treasuries currently yield fairly healthy returns, the annual yields offered by certain annuities can exceed those amounts depending on age and time of investment.

And unlike the I-Bond or short term treasury rates, the annual percentage amount promised will never go down as long as you live. As mentioned, in fact under certain conditions, what you receive every year may even go up.

In conclusion, there may be other terms and conditions that apply and annuities are insured by the underlying insurance company and are currently not covered under the FDIC envelope. If interested, illustrations and the policies can be obtained through any annuity licensed agent or properly licensed financial professional.

“Watching the markets so you don’t have to”

(end)

(As mentioned please use the below disclaimer exactly) THANKS   (Regulations)

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. (530)559-1214. He was voted best financial advisor in the county 2021.

 


 

Bonus Income Annuity April 4 2023

 

 

Grab free cash with BONUS INCOME ANNUITIES 

 

With the market in ongoing turmoil for well over a year now, and no way of telling if the recent rally in the first quarter of 2023 will stick, the annuity option has been a hot topic here on Money Matters.

Annuities are contracts between you and a large insurance company that states the insurer agrees to pay you over a period of time an amount based on the terms stated in the contract.

There are many variations on annuities and I have covered the few I recommend for many clients in past Money Matters radio and newsprint. I often use my own annuity names when describing these to better illustrate their advantages.

Today’s flavor of the month is what I call the “Bonus Income for Life Annuity”.

Unlike Participation Annuities that give you a portion of the stock markets increase measured over time, and Triggered Annuities, that promise a minimum and specific percentage return should certain things happen in the markets, Bonus Income for Life Annuities add a bonus payment to the amount a customer puts in as soon as the papers are signed, then pay a fixed lifetime income.

For illustration purposes, I always draw on real life annuity products that actually exist when describing annuities and today is no exception.

Similar to other income for life products, the Bonus Income for Life Annuity insures the customer won’t outlive their money. The payments are for life, even if it’s over and above the amount you put in. The bonus referred to means the insurer adds a bonus to the amount you put in at the moment you open the annuity.

Specifically, in this annuity, suppose you put in $100,000.00. The day the papers are signed, the insurers ADDS 20% to what you put in and subsequently would credit this account $120,000.00 immediately.

Yep, you read that right. 20% is added to your deposit.

You can’t then close the annuity and remove 120K obviously, but the 120K is there and used to calculate your lifelong payments.

You leave the money in the annuity until the day comes that you decide to “pull the trigger” and begin your lifetime payments. The payments will then continue until you die. If you want to add a spouse or significant other, you can, which means payments continue until both of you die.

Once pulled, you cannot “un-pull” the payments which means once you decide to start payments, that’s it.

How much will you get each year?

That depends on your age when you open the contract and your birth gender. The younger the age, the lower the payments. This is because the insurer is paying you for life, so the insurer rightly adjusts the payments assuming it will have to pay younger applicants for a longer period of time.

The payments can be surprisingly large. I ran one on myself at age 67, male, and if I waited only 2 years to pull the trigger at age 69, hypothetically they would pay me 8.01% on my original deposit every year for the rest my life.

Not bad.

Wait 4 years and the payment rises to 9.44% for life and if I wait 6 years, I get an 11.33% annual percentage until the day I die.

I ran one for a 71 year old male and the yield is even higher. If he waits 3 years, he gets 9.46% APR for life and waiting 5 years nets him an annual return on his money of 11.32%. Waiting 9 years gets him a whopping 17.22% on his original deposit for life.

Upon death, what hasn’t been paid out is returned to the estate and both the payments and the returned amount to the estate can also increase as the principal is tied to variety of stock indexes.

As with all the annuities covered here on Money Matters, there is no downside risk, you can withdraw a certain amount a year if needed, early withdrawal fees over the allowed annual withdrawals may apply, and there are no medical tests or preexisting conditions that will affect issuance.

Considering I-Bonds and Treasuries currently yield fairly healthy returns, the annual yields offered by certain annuities can exceed those amounts depending on age and time of investment.

And unlike the I-Bond or short term treasury rates, the annual percentage amount promised will never go down as long as you live. As mentioned, in fact under certain conditions, what you receive every year may even go up.

In conclusion, there may be other terms and conditions that apply and annuities are insured by the underlying insurance company and are currently not covered under the FDIC envelope. If interested, illustrations and the policies can be obtained through any annuity licensed agent or properly licensed financial professional.

“Watching the markets so you don’t have to”

(end)

(As mentioned please use the below disclaimer exactly) THANKS   (Regulations)

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. (530)559-1214. He was voted best financial advisor in the county 2021.


 

More on annuities 3 1 2023

 Annuities gush cash ? 

Because of my article a few weeks back on triggered annuities (my term), I received more than the usual amount of emails.

In response, I thought I would lay out some more details about annuities in general.

An annuity is a contract between you and an insurance company. You can obtain annuities through banks, advisors, insurance agents or financial planners, but only insurance companies write the actual policies. The companies are usually multi-billion dollar entities, highly regulated with publically available financial ratings which you can find easily on the web.

The buyer of the annuity pays one lump sum to the insurer or can elect to make regular installment payments over time depending on preference.

The insurer promises to pay you back either in periodic payments or in a lump sum. Annuities can be tax deferred, meaning during the growth period your investment may compound at a greater rate than one subject to yearly taxation.

Basically there are three types that fall into two categories. The three types are:

Fixed, variable, and fixed-indexed (my favorite).

Fixed annuities offer a fixed and guaranteed rate of return. Much like a CD or any other type of investment that offers an interest rate back to the customer, fixed annuities do basically the same thing.

Variable annuities track an underlying investment such as a stock market or hybrid index and its payments and value can go up or down depending on index performance.

Fixed-index annuities, similar to a variable annuity, track an underlying “index” but may provide principal protection in a down market. An opportunity for growth exists when the underlying index performs positively within a measuring period but there is never any downside. The “triggered” annuity I wrote about falls into this category and may offer a guaranteed return no matter what. Find the past “Triggered” annuity article here (www.moneymanagementradio.com).

The two categories of annuities are immediate and deferred.

An immediate annuity starts paying you back as soon as you sign the contract, while the deferred annuity starts the payments sometime in the future.

For a long time, I was not a big fan of annuities and in my opinion, they were sort of the wild west of investing. Many were complicated, fee expensive and convoluted.

However, in recent years, I find many have been simplified, streamlined and constructed in a way that is easily understood and easily explained. And a few are downright brilliant. My opinion of course.

Annuities are not for all investors but they do have their place, and in many cases help alleviate the stress of up and down markets. As explained above, some offer guaranteed returns and some offer 100% principal protection yet possible stock market participation in up markets without the downside. One could argue the best of both worlds.

Keep in mind, variable annuities DO have downside risk, so make sure you understand the difference between a fixed and variable annuity.

A common complaint about annuities in the past is buyers of annuities lock up their money for the duration of the contract, making it in essence an illiquid investment. This is not entirely true in today’s annuity environment as many annuities allow for periodic withdrawals up to a certain percentage of the account without penalty.

In a nutshell, properly selected, and quoting from my favorite types here, certain annuities can guarantee your entire investment thereby eliminating the stress that comes with the ups and downs of today’s markets. Simply put, one has the possibility to participate in up markets, yet not take part in the down ones and possibly even earn interest during that time. You can withdraw a portion of your cash if needed, and avoid the bite of the tax man by the deferment quality of the investment.

Annuities don’t have to be complicated. In fact, they shouldn’t be. If you find one that is, look elsewhere. There are many offerings out there that may meet with your risk tolerance and investment expectations and are easy to understand.

As always, make sure you understand all the ins and outs of any investment you are considering. A capable financial professional should be able to help you navigate the annuity options out there in a way that is simple and easy to understand.

Annuities may not be for everyone, but for some, they might be exactly what the doctor ordered.

“Watching the markets so you don’t have to”

(end)

(As mentioned please use the below disclaimer exactly) THANKS   (Regulations)

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Annuities are not FDIC insured and guaranteed by the underlying insurance company. Early withdrawal penalties may apply. See your tax professional for all tax inquiries. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. (530) 559-1214..

 


 

GUARANTEED PRINCIPAL - MARKET UPSIDE THE BEST OF BOTH WORLDS READ UPDATE 2/18/2023

With the latest rally in stocks, investors must be wondering if this recent bout of green is just another in a long series of bear market rallies which will end in another gut wrenching sell off. We have seen this movie before in the year 2022. Stocks crash, teeth gnash and hands wring, then the markets rallies, and hope springs eternal that the portfolio bloodletting is finally over. A then a few days or weeks pass, and another crash takes place, seemingly worse than the one before it.

Repeatedly beaten down in discouragement, investors can find themselves not knowing what to do. Calls to their advisor yield little other than a recording saying “stay the course”.

Although you’ve been told the markets always recover, no one really knows how far it will go, how long it will last, and indeed, if it ever comes back at all. I mean, it IS possible.

There can be solutions for less tolerant investors. As covered previously here in Money Matters, Inflation Protected Bonds, called I-Bonds, from the U.S. government, are currently paying 9.6% APR and are 100% guaranteed. The interest rate does adjust every 6 months so the yield may increase or decrease over time.

(You can read about I-BONDS here: https://moneymanagementradio.com/home).

Rates at your local bank or credit union are better than they have been in years. Cd’s, high yield savings accounts and short term Treasuries rates (U.S. government debt) are nothing to sneeze at  and might be worth a look.

Another not so well known option is what I call a “Triggered annuity”.

An annuity is a contract between you and an insurance company. In the simplest form, you give the insurer a lump sum, and they promise to pay you a certain amount in the future, either in a lump sum or payments stretched out over time.

Although there are many variations on annuities, the triggered annuity has some unique features. The specific annuity in this example measures a stock index on the day your annuity takes force. This particular annuity measures the Standard and Poor’s 500 Index (S&P500), one of the largest stock indexes in the U.S. stock market. One year later, the index is measured again. If the index is exactly at the same value or up by any amount, the annuity company credits your account 8%. That means even if the index rises by only one millionth of a percent, you still get 8%.

Every year the process repeats. If the S&P increases again by the next anniversary date, you get another 8%. Once credited, the gains can never be taken back, which means it can only stair step up and can never go down. The company caps your gain at that 8% a year so if the index goes up by more than 8%, you still only get the 8%. On the optimistic side of things, if the index goes up by even only one iota every year as measured on your anniversary date, at 8% a year, you would double your money 9.1 years. If the index drops in any one year, you don’t gain anything but you also don’t lose any money. If the index drops every year for 7 years (the term of this annuity), they will pay you a minimum guarantee of 1% compounded over the life of the annuity which comes out to about 7.2%.

You will either get the 7.2% return or the gains in the market, whichever is greater. You can also withdraw 10% a year after the first 12 months if funds are needed. Withdrawing more will incur early withdrawal penalties and other terms apply but an annuity such as the triggered annuity may be a way for investors to participate in up markets yet have their principal guaranteed against loss.
 

In prolonged market crashes such as the one we are now experiencing which is now almost a year in duration, a triggered annuity may go a long way in calming investor nerves. After all, who knows how much longer this current market correction will occur and how low it will go.

“Watching the markets so you don’t have to”

(end)

(As mentioned please use the below disclaimer exactly) THANKS   (Regulations)

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Annuities are not FDIC insured and are insured and guaranteed by the underlying insurance company only. Early withdrawal penalties may apply. Annuities may or may not be suitable for all investors. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, SDSU, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214.

Disclaimer: This is not a recommendation to buy or sell any securities. May include forward looking statements. Past performance is not a guarantee of future results. No one can predict market movements at any time. Investing involves risk. You can lose money, including total loss of principal. Consult your tax advisor for all income tax related questions. Stop-loss strategies utilize stop orders which turn into market orders, so they may not limit losses. Dividends are not guaranteed and may be cut or eliminated at any time and may not prevent losses. Annuities are not FDIC insured and are insured and guaranteed by the underlying insurance company only. Early withdrawal penalties may apply. Management fees are not allowed once funds are moved to an annuity. Annuities may or may not be suitable for all investors. Indexed funds attempt to track the underlying index but are only a proxy for that index and may or may not track the index exactly.

 


 

More on Bitcoin Feb 11 2023

 

With the advent of cyber currency, first with bitcoin then followed by a host of others, it was only a matter of time until Uncle Sam threw its hat into the ring.

Crypto currency as it is called comes in many forms. Bitcoin being the most notable, there are many others that go by names like Ethereum, Ripple, Stellar Loomis, EOS and Lightcoin to name a few. With currently over 5000 cyber currencies, it certainly seems like everyone is issuing their version of internet cash.

The idea behind crypto is its anywhere and everywhere there is internet access. Not controlled by any one government, crypto is “mined” by using mathematical formulas called block chain technology. Wikipedia describes it as: “A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets”.

As a currency, its qualification meets some of the characteristics a medium of exchange must possess. A currency must be hard to replicate, be divisible, recognizable, have uniformity, be portable, have acceptability and maintain a store of value. On the first six characteristics, crypto could be argued fits the bill nicely. My objection is having issue with the last characteristic, maintaining a store of value.

Its goes without saying that at times, the price of cyrptos can vary tremendously. Stories of skyrocketing prices and subsequent roller coaster like plunges are common. Although a rising price may convince some investors (and I use that word loosely) to believe crypto makes a great currency to own, the very fact it rock and rolls violates the store of value characteristic in spades.

Store of value means both the buyer and seller of the currency must have faith in its stability. Stability meaning it doesn’t go up or down much. Certainly the buyer of crypto relishes the meteoric rise when it occurs, but like all things money, there is always someone else on the other side of the trade. If an owner (buyer) of crypto makes an overnight fortune on a crypto blast off, the seller of that crypto lost an equal amount. For to buy crypto one must have exchanged something else for it. Usually it’s another currency that is exchanged and the person who sold the crypto now holds a currency that has fallen in value by an equal amount.

Stability, the very definition of maintaining a store of value, is almost nonexistent at this time in the cyber coin market.

Another attraction of crypto is the fact no one or no one government can shut it down. Again from Wikepedia: “It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries”.

By the nature of how its created and it ownership maintained, each coins “DNA” (the mathematical formula that created it) is stored on each and every computer that possesses it. Since the internet is worldwide and basically unstoppable, the thought is it can’t be confiscated by meddling governments and therefore safe to own.

Although the concept of non-interference is maintained in its purest sense, central governments can and have shut down its exchanges. This means if your country of residence decides it doesn’t want you trading crypto, it can shut down all the ways you can trade it by shutting the exchange websites. Internet workarounds are certainly possible but for the average Joe, those backdoors may be difficult to access.

Governments maintain strict controls over their respective currencies. They are the lifeblood of an economy and also the bank accounts for governments. History has proven time and time again a government will insure its currency is valid and not usurped by another other if it deems it necessary.

Currency controls are common as are restrictions against exchanging a countries currency for another as citizens as governments try to protect themselves from a currency crisis.  A currency crisis is the absence of confidence in that currency. Think Mexican peso.

That said, to say central governments aren’t fully aware of the threat crypto present to their currencies and their economies would to be more than naïve.

Governments worldwide are looking closely into the rise of crypto currencies.

Case in point, the U.S. government is looking into issuing its own version of the cyber coin said Federal Reserve Governor Lail Brainard last year in a conference at Stanford University. The U.S. is not alone. Brainard confirmed the issue is being discussed with central banks worldwide by adding: “we are collaborating with other central banks as we advance our understanding of central bank digital currencies”.

It’s only a matter of time before governments bring down a harder hammer on cyber coins.“Watching the markets so you don’t have to”

(end)

(As mentioned please use the below disclaimer exactly) THANKS   (Regulations)

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214.


 
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