Tim Tremblay of Tremblay Financial Services Discusses Interest Rates
Jason 0 Comments Career after Retirement Retirement Planning
[Music] higher interest rates may be bad for financing a home but there is a silver lining the most challenging part of investing and retirement planning has always been balancing asset growth with asset protection to protect assets we typically need to lower Market risk and to achieve growth we need to increase risk now with higher interest rates we can actually do both there are solutions positioned in ways we haven't seen before joining me to talk about this is my guest Tim trembl with tremble Financial Services in Santa Barbara California uh Tim let's start out with these strategies how do these things work well you know it's it's interesting I had a client come in and talk to me about this investment that's in the market but there's no risk on the downside and I said you know that doesn't sound right you better bring that in so I can take a look at it so he brought in a fixed indexed annuity with Life USA and as I looked at it I thought this is a great idea they're using call options to get Market driven returns with no risk on the downside and that was almost 26 years ago and since that day we've been using fixed indexed annuities as the foundation for our asset allocation for our clients at Tremblay financial and it's real simple how it works it's with a call option there are two types of options puts in calls the option Market is a huge Market you have options on stocks on Futures on indices and what the financial services companies the insurance companies are doing they're just looking at a call option on the market and so with this investment it can only go sideways or up never down and what I like to do when I show my clients how this works is is look at the worst 10-year period that we've seen in the market since the Great Depression we call it the L decade and that would be 2000 to 2010 if you got into the S&P 500 Blue Chip stocks at the at the beginning of that decade in 2000 we were at a record high the dots had just brought us up there and then over the next 3 years we saw the Melt down to the Dooms we saw 911 Afghanistan Iraq if you had $100,000 in Blue Chip stocks at that time three years later you'd have 51,000 and then over the next four years we saw the market go up very nicely fueled by collateralized mortgage obligations which had a risk that we really weren't aware of at that time and we saw the market go back to a record high just a little higher than where we were in 2000 and of course the Great Recession took place at that time we saw if you had a $100,000 in Blue Chip stocks in 2008 a year later you lost 60% of your portfolio small caps NASDAQ other indices and and positions were even more dramatic and then it came back but at the end of that 10-year period from 2000 to 2010 in Blue Chip stocks you would have been down down 20% now with fixed indexed we are very grateful to have that as a foundation for our clients those first three years as we saw a 50% decline you didn't lose a dime and then you don't have to make up losses with a fixed index and as the market moved up over the next four years our call options took us to a 40% profit 2008 then of course when the Great Recession hit you saw the markets decline dramatically we stayed at that 40% profit through the rest of that decade so as you look at all the other asset classes during the worst 10 years that we've seen since the Great Depression the fixed indexed annuity was the best performing asset that we had and we can use the word safe with it and you know Scott I think that's what I like to show folks if you show folks how the markets have done when when things are going great just about anything is going to look good but how does your investment look when you're going through one of the most difficult times that we've had since the Great Depression so is this a good time to consider maybe refinancing an existing annuity you know it it absolutely is Scott when we look at at where these fixed index annuities have gone over the past 25 years there's been dramatic changes those early life USA policies in order to get the profits that you had with those Investments you had to annuitize over 10 years that's no longer the case the liquidity was 5% per a 5-year period and you had to hold it for 10 so you didn't have the liquidity today we have fiveyear 7year 10year in fixed index annuities and you don't have to annuitize they contracts they're they're much better we have a whole wide range of indices that we can choose from from your participation with higher interest rates will be better today than what we've seen in the past so to answer your question today is the best time that we've seen in the past 25 years to be looking at fixed indexed annuities and and if you're out of surrender with an old annuity it might be a variable annuity and you've heard a lot of bad press on variable annuities uh they have management fees from the insurance company the underlying mutual funds have management fees you have risk a principle with the variable annuities so that isn't for all people and you have to understand there's a risk the fixed annuities based on interest rates we haven't seen a decent interest rate in 15 years and we've just seen short-term rates come up long-term rates we have this inverted yield curve are still not looking good for us so the fixed indexed annuity continues to be in our opinion one of the best or the best place for your safe money in your asset allocation and it's important to look at what you have now in the annuity Arena and seeing if we can improve that and put you in a much better position and for someone considering the purchase of a fixed index annuity what question should they be asking well it's important that you understand that it's a long-term investment most of them are longer term uh the shorter term ones won't give us quite the return that you will see with the longer term fixed index you have to understand the liquidity that you have with those fix fixed indexed annuities and then it's important to look at how can you get your return what kind of index is going to be available to you as an investor and and the company that you're working with is so important it's not just the return but the service that you receive from these insurance companies is so important so there's a number of different aspects that are very important for investors to look at as they begin their Journey with a fixed index or continue it in a better way uh and it's something we take a lot of pride in at tremble Financial we're going to help our clients not only have the asset allocation to get them where they want to be in in retirement but when you look at each of the individual Investments That We're choosing for that asset allocation we're going to find the very best one for you that's Tim tremble in Santa Barbara California thanks for watching retirement News [Music] online
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