A Fixed Indexed Annuity Success Story

Fixed indexed annuities are fixed interest rate annuity products that derive the interest rate credited to the policy’s cash values based on movement in an index (the same way indexed universal life insurance derives an interest rate).

They often provide additional benefits through a rider that guarantees a level of income from the annuity. The accumulation of income benefits from these contracts are strong for the risk averse individual.

Keep Reading

How Much Do You REALLY Need to Generate Your Retirement Income

How much Money do I need to Retire

A lot of Americans are struck ill thinking about how much money they need to retire. Several trade associations within the financial services industry have noted the lack of preparation both consumers and financial advisors et. al. have as it relates to turning your heard earned and saved dollars into retirement income. This problem has sparked a massive revamping of academic instruction among the industry’s best-known degree/certificate granting institutions.

This has accomplished some success in at least changing the conversation as it relates to retirement planning, but there’s still plenty of room for additional awareness and today I want to drive home a significantly important point about what it will really take to achieve comfortable retirement income.

Keep Reading

Average 401k Returns: The News is not so Good – Average Rate of Return on 401k

Average 401k Returns

Back in the Spring of this year, good news came out of CNBC regarding average 401k returns when they published an article titled Big Surge in 401k Balances, but Workers still not Saving Enough. The news out of this article was that the average 401k balance had grown $42,400 or nearly doubled from five years ago. Sounds great and it looks like Americans achieved a super awesome return on their 401k balances (finally).

Only, it didn’t happen that way.

Keep Reading

The Securities and Exchange Commission is Above the Law

Following up on a theme we’ve discussed before about certain people having access to trading options that you—the retail investor—do not, we figured we’d talk today about the Securities and Exchange Commission and its approved practice of insider trading among its employees.

You see, at the SEC, insider trading is not only allowed; it’s required.

Keep Reading

401k’s Aren’t the only Retirement Plan that can Leave you High and Dry

Arent the only Retirement Plan that can Leave you High and Dry

We’ve definitely not shown a lot of love and admiration for the old 401k Plan around here. While  there may be circumstances where contributions to a 401k make sense (though relatively few circumstances) we would be remiss not to point out that 401k’s and their sister products (e.g. 403b’s, 457’s, etc.) aren’t the only wholesale retirement product that can let you down.

No, I’m afraid one of the most respected retirement vehicles that many would love to see gain a resurgence in the employee benefits market place can also be just as disappointing for a number of reasons. I’m talking, of course, about traditional pension plans.

Keep Reading

The Dow Jones Industrial Average: 8% per Year?

The Dow Jones Industrial Average

While there is no doubting the last couple of years have been really great years for the stock market (if you think of it in terms of the growth over the year, rather than growth from many years past), but we’d like to take a moment and think of things a tad longer term.

But keeping with our traditional habit of raining on parades, we wanted to take a moment to point out that not all that glitters is necessarily gold. We’ve talked before about where the Dow Jones Industrial Average would need to be in order to have achieved an 8% per year rate of return since 2000, and figured it was about time that we updated those numbers.

The answer:

Keep Reading

Ted Benna: The 401(K) Giveth and Taketh away

The 401(K) Giveth and Taketh away

By all accounts Ted Benna should be heralded as an American hero. But I’m willing to bet most of you have never heard the name. Ted is credited as being the guy who created a financial tool that reformed personal finance throughout the last three decades and made more Americans members of the stock investing society than any other financial tool ever created.

However, Ted is rather ho hum about his creation these days. Noting that it’s largely an unwieldy beast that has taken a form he never intended, and the only way to fix it—in his eyes—is to blow it up and start over again with something completely different.

And what was it that Mr. Benna created that has veered so hopelessly off track that it cannot be repaired?

Keep Reading

Can we Please Stop Pretending that Market Corrections are Unusual and Rare?

Can we Please Stop Pretending that Market Corrections are Unusual and Rare

Stock Market Corrections are a fact of life in a our economy. There are several theories that seek to explain this phenomenon, and I personally like to think it’s a result of our warped implementation of market economics, but what do I know?

Lately certain members of the press have been buzzing a bit about the stock market and whether or not it’s headed for a decline. Will 2014 be the year to kiss your post 2008 gains good bye?

Hmmmmm?

Keep Reading

Why Your Rate of Return is always Different

Why Your Rate of Return is always Different

Most of us have seen the marketing brochures distributed by mutual fund companies and investment products salespeople as an inducement to place our money in a fund. At the very least, we’ve encountered historical returns posted within a 401k plan that some people use to help select where they place their money.

But have you ever noticed that when you look at the historical return data, your rate of return seems to magically be different? What gives? Some might explain this as entry and exit variances that alter the yield vs. the calendar year assumptions put in place on the historical data and to some degree this is true. But the real answer to this lies a little deeper and has to do with a little slight of hand, and some simple mathematics.

Keep Reading