Protect Your Money and Make Money

This job comes with its fair share of criticism but rather than complain I reserve the right to remind everyone when I called the shot. I didn’t specifically see this week coming because I prefer the casual approach. I thought it would be more consistent and gradual and have only been hinting at it for the last couple of months. And you never know, it may not be over yet. When a ten-year bull market runs into a black swan event like Covid-19 the results have the potential to be much more violent than anything we’ve ever seen.

Safe is cool about every ten years and it was about time to see it again. This week I got an email from a longtime reader of this weekly post. The message was simple, “Damn if annuities don’t look pretty awesome right now.” Yes, they do, and it goes beyond not losing money.

For the last few months, many people have constantly been in search of something better. “Sure I’d like to protect some money, but I’d better get near market returns or I don’t want it.” After a 30% annual yield, expectations are high. It’s as if that happens every year but we all know better. 2019 presented a special opportunity. It honestly moved millions of people into a completely different financial realm. But those who want all of the market sure as heck got what they asked for.

So the first thing I’ll say is don’t worry because you’re right back where you started. You didn’t really lose money. You never had it in the first place because you have to sell the asset first. Stocks and bonds aren’t money. Trading may be a great way to get money but there’s a transaction that needs to take place before you can buy a sandwich.

I feel for people. I care about what I do and am happy to know that as bad as things may seem, most of the people I have talked to are still just fine, even if a bit bruised for the time being. Rather than rub salt in the wounds I’m going to remind everyone of something I’ve been recommending for the past year. Not everything lost big this week. Bonds made a little money and one stock in the S&P 500 is actually up 8%.

There may be a few other bright spots but I want to show everyone what happened with my top recommendation. It’s not a contract, but rather an index. It was up steadily all last year and it didn’t beat the market but continued higher at a more modest pace. It wasn’t good enough for some people but those who took it will be happy they listened to me.

The good news: S&P 500 is still up 6.1% from one year ago. You all have more money than you did a year ago.

The bad news: S&P 500 is down 8.56% year-to-date. Many of you have less money than you did two months ago.

Life isn’t so bad, right?

My top recommendation from the past year has been the S&P MARC 5 Excess Returns index. Basically, it’s a blended index with a combination of securities, commodities, and fixed assets. It is managed to move to safety when volatility is high and toward growth when volatility is low. It works really well to produce steady returns and puts a 5% average yield well within reach. A lot of people said, “No, I don’t want that.” My favorite response is, “I’m busy and don’t have time to deal with this right now.”

The good news: S&P MARC 5 is up 13.74% from one year ago. That wasn’t looking too special a couple months ago but we’re talking about annuities and protecting money is what’s important. Good yield is a bonus.

The bad news: S&P MARC 5 was down a little this week too, but it’s still up 2.46% year-to-date. Oh wait, that’s not really bad news.

And you can get it with a 90% participation rate and no cap. A lot of you know that because I already told you but with rates changing it won’t be there for long.

I’ve always been into scoring as many points as possible. My version of the old sports adage: the best defense is a good offense. You need to understand things are not yet all that bad and if you want to protect money you can still make money at the same time. With fixed rate yields sure to drop along with treasuries, it puts bonds in a precarious situation, and good luck finding safety and yield anywhere else. There has literally never been a better time to do it right. It doesn’t matter what you did, it’s what you do now.

You can listen to me or not. That’s up to you.


Further readings

Are Fixed Indexed Annuities a Good Investment?

Fixed Indexed Annuity Taxes

Who Shouldn’t Buy a Fixed Indexed Annuity

Last Updated on April 1, 2024 by Bryan Anderson