Daily Gains Letter


Should Annuities Be a Part of Your Balanced Retirement Portfolio?

By for Daily Gains Letter | Dec 27, 2012

Balanced Retirement PortfolioIf you’re afraid of outliving your retirement assets, you aren’t alone. In fact, the fear of outliving one’s retirement income is actually greater than the fear of dying. Further, while the vast majority of “baby boomers” view retirement as a crisis, few understand how much money they’ll need to retire. That’s a scary thought when you consider over 10,000 baby boomers are retiring every day. (Source: “Outliving Your Money Feared More Than Death,” Allianz Life Insurance Company of North America, June 17, 2010, last accessed December 21, 2012.)

When Social Security was first introduced in 1965, the typical retiree only lived a few years past their retirement date. Today, the average retiree can expect to live well into their 70s.

The increased life expectancy has put the once-adequate retirement income system under increased stress. And, as a result, retirees can no longer expect Social Security to make up a majority of their income. To enter the golden years in style, retirees will have to find creative ways to increase their investments.

Having witnessed market uncertainty and turmoil over the past five years, many baby boomers are looking for investments that offer both stability and security. Putting part of your retirement fund nest egg into annuities is a great way to increase the value of your portfolio.

Annuities are not like conventional securities. Some annuities provide set monthly checks for life and are independent of the ups and downs of the stock market. Whether you are talking about annuities or your overall investment strategy, having unrelated assets is key to managing risk.

What is an annuity? An annuity is a way … Read More

Should You Trust Your Insurance Company’s Annuity Buyback Offer?

By for Daily Gains Letter | Dec 24, 2012

DL_John_3You have an annuity. Now what?

Variable annuities have become a major part of the retirement and investment plans of many Americans. Over the last number of years, insurance companies have been urging customers to buy annuities in an effort to provide tax benefits and a steady stream of income during their retirement years.

For an extra fee, annuities provided steady income for the buyer’s lifetime, even if the fund account was wiped out. Not surprisingly, annuities have made insurance companies a lot of money. All of this made sense to the insurance companies when they raked in $187 billion in sales in 2007…just before the financial housing bubble burst and the stock markets crashed.

With that in mind, those with annuities should be a little suspect to hear that insurance companies are offering to buy back the guarantees, offering more than they’re worth.

In November, The Hartford Financial Services Group, Inc. (NYSE/HIG) announced a plan to ask some customers to trade in their annuities. (Source: “Hartford Offers Buyouts to Annuity Clients to Trim Risk,” Bloomberg, November 2, 2012.) This after AEGON N.V. (NYSE/AEG), AXA Equitable Life Insurance Company, and Transamerica Life Insurance Company made similar offers.

The crashing markets and promised payouts ate into corporate earnings; raising capital to cover costs also diluted shareholder value. In an effort to hedge against further losses, the companies have been asking customers to cash in.

For starters, customers should ask themselves why an insurer would want to offer more than the investment is worth. To selflessly reward their loyal customers? Insurance companies do not have a rich history of looking out for … Read More