Why SMA’s Are Hard To Beat

While we work with a variety of annuities, we frequently gravitate to Secondary Market Annuities.  For investors specifically seeking a lifetime income stream that can not be outlived, SMA’s are not appropriate.  But for many, a fixed period of time or a fixed lump sum is appropriate, and the yield on the SMA’s makes it very attractive to use these fixed term cases.

For period certain returns, SMAs are beating everything handily with nothing else coming close for the following reasons:

  • The returns are well above any other fixed income asset class of similar safety and credit quality (A to AAA)
  • The income on the SMAs is consistent, known and a blend of principal and interest, facilitating a known and orderly drawdown of assets without risk to principal from price fluctuations
  • By using SMAs you’ll be able to count on this portion of your portfolio to provide steady, consistent cash flows to supplement your monthly living expenses and thus allowing you to leave other investments alone, allowing them to return to the “Average Returns” and eliminate a “Sequence of Returns” risk.  See this excellent summary of the sequence of returns risk, a study by Moshe Milevsky
  • Diversification will be achieved by purchasing several different SMAs that add up to desired investment and will provide the desired income

To put a solid floor of income in place, determine your needs and goals.  Contact us and let us know what you are looking for.  Understand the process so that when we find the right deals for you, you can make an informed decision

It takes some patience but in the end it’s well worth it.

2 replies
  1. Norman Schellenger
    Norman Schellenger says:

    I am 82 , my wife is 72 . When I pass, she will need about 50k a year to replace my pensions which will stop. We have 1.6 million in cash. What annuity do we need if any..? Thank you Norm

    Reply

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