A Wild 2019 and How Annuities Fit
This year so far has certainly had its share of ups and downs. In some ways it could be viewed as a microcosm of the issues one might face throughout all the years of retirement. It’s summer time and I stepped away from writing for a few weeks because I figured no one would notice. The weather has been nice and most Friday afternoons I decided to get out of town and refresh myself. The bug to get back to writing hit me and it made sense to do something of a recap of the year.
And what a year it has been. Political and economic uncertainty have been prevalent. The stock market has been up and down with almost no consensus as to whether the bull market will continue or if we should expect a serious correction. Interest rates that started to rise last year settled back down to some of the lowest levels ever while the Fed is trying to prematurely prevent a recession.
At the beginning of this year lots of people were hurting, or at least very concerned. The market was down sharply to end 2018 and the damage to portfolios had everyone frozen. No one likes to move money after a big loss, preferring instead to sell only for top dollar. Whether that actually happens is a different matter altogether. But the market came back… and then dropped again but came back, and then this week happened.
Through it all I have become more confident in the recommendations I make. That’s because fundamentals always hold true and if you plan based on those you’ll be just fine. Throughout this year I know people who have lost money and people who haven’t, those who worry and those who don’t. I’ve created new strategies that enhance the potential of a protected portfolio and through it all discovered even more benefits for using annuities in retirement.
People say all the time that my approach is much different than anything else they’ve seen. Of course it is. How can you expect to do better if your strategy is not different? I’d pick a different line of work if I had to be as boring as everyone else. If I didn’t have a solid rebuttal to the asset management proponents then I’d throw in the towel. But here I am trying to convince people to see things through a different lens.
Aside from the market being all over the place, this year has seen some whacky interest rate moves. For years all the armchair economists have been telling me that rates are going to go sky high. That started to happen a bit last year but very few took advantage. A few months back I hinted that rates might drop. Not many people read that newsletter because I guess it wasn’t interesting enough. Can anyone tell me where treasury yields are compared to earlier this year?
I watch Bloomberg for my financial news. It’s not very political and offers a diverse, global perspective that gives me an idea of what concerns institutional investors have. If the big boys and girls are worried about something than maybe you should be too. Of all the research and reading I do, information specific to annuities takes about 10% of my time. The other 90% of my time is spent understanding the broader world of financial markets and economies. Last weekend I took the family on a camping trip in Canada. I spent five minutes fueling up my truck and an hour looking over maps to be sure I could make the most of our time.
Strategies are more important than products. It’s better to be flexible than stagnant. Things have been up and down this year but everyone is alright for the time being. Through it all I’ve been saying the same thing over and over again. Some listen and others don’t. If things change I’ll pivot on my recommendations and those who work with me will be able to do the same. For those people we set things up right and there will be no issue with altering a plan because we built every single one to do it.
The old saying still holds true. Fear and greed drive most financial decisions. It’s contrary to the rational thought and objective analysis it takes to make solid plans. I’m not a psychologist and don’t know how to pull people away from emotional tendencies so the best thing I can offer is consistency. Take the best deal you have today but reserve the option to make changes over time.
If you’re up for a rational conversation then leave a comment below or give me a call. And if you’d like to know specifically how annuities fit, please follow the link to my second post on this subject titled “The Relevance of Index Annuities Today.”
Have a nice weekend!