11.30.22: Audio automatically transcribed by Sonix

11.30.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Prosperity Principles with your host Ed Cruz. Each week, Ed and his company seek to educate Americans like you by providing real strategies for protecting and growing their hard-earned money. Get set for a full hour of financial information and economic news affecting your bottom line. Ed wants you to reach the financial freedom you've worked so hard for. So now let's start the show. Here's Ed Cruz.

Ed Cruz:
Well, thank you for joining me this week on Prosperity Principles. I'm Edwin Cruz, your retirement planner for over 24 years in central Florida. And here to join me on today's program, as always, is Matt McClure. And we're going to be speaking a little bit about back to the basics. And, you know, here we are approaching December and the New Year's resolutions are on people's minds and we're going to be covering how to retire in today's difficult financial landscape. And we know how difficult it's been. So with all that said, welcome, Matt.

Producer:
Hi there. Ed. Yeah, it's been it is kind of a crazy, crazy time. I think maybe I've said this before, but weird, I think is the technical term for a lot of what we've been going through these past couple of years, really. But yeah, that's what we're going to do is try and try and get rid of some of the mystery surrounding some, you know, planning for your future, planning for your retirement today, and helping folks know that there really are options out there, even in this weird landscape and even no matter what their particular financial picture might look like right now.

Ed Cruz:
Absolutely. And, you know, obviously, the one thing that we always do is try to present solutions that are custom tailored to what the needs may be of that individual. And to get back to the basics, it's funny, when we're successful, we tend to get away from from everything that is basic. And so let's do one thing right off the get go here to help you get back to the basics. We want to offer you a book that kind of gives lays all the groundwork, all the foundation. So in order to get that book into your hands, all I need you, the audience, to do, is to to call me at 386 228 5769 and we'll get the Annuity 360 book in your hands. That will kind of give you a good look at what we're talking about here. When when we talk about getting back to the basics and laying a good foundation.

Producer:
Yeah, it's a great book. It's not a long, long read. We're not asking you to read War and Peace here. It's it's got a great ton of information, though, contained within those pages. And again, you can call at 386 228 5769 or go to MyProsperityTeam.com. And hey, it should mention, by the way, the website is the place to go as well to listen to past episodes of the show. You can go there and find all of our episodes. You can look at our podcast stream, also subscribe and really either there at MyProsperityTeam.com or wherever you get your podcast, you can find us and subscribe there and leave us a comment. We absolutely love hearing from you, the listener. Absolutely do, and get giving us that feedback. We really, really love that. Well, something else that we need to do here toward the top of the show is issue, this reminder that we've been telling folks about. And we're we're coming close to the end of this period, which is the annual enrollment period for Medicare or AARP. And, you know, folks, if you haven't reviewed your Medicare coverage yet, you got to get on it, right?

Ed Cruz:
Yeah, just a little over a week left. December 7th is the deadline. And, you know, let us know what you're what you're facing, what your challenges are today with Medicare. And if there is a better solution for you, we'd love to give you the the advice and and move on from there. But, you know, there's only one way to get information that's reaching out to us. 386 228 5769.

Producer:
Yeah and get some help being walked through some of the ins and outs of Medicare because it's a bit of an alphabet soup, you know. Okay, I'm part AA, part B, part D, part C, part you know, X, Y, Z, What are all these things we're going to we got people who know what they're talking about. They're going to make sense of it. And that's absolutely what you need to do, folks. And once again, that number 386 228 5769. Well, we'll get a lot of great stuff coming up on the show here today. And of course, we've got an inflation demonstration. We'll talk about getting back to the basics, as you said, how to manage risk protecting your hard earned money as well. We'll do a little bit of a cost cutter. We'll talk about what's going on with cryptocurrency, which has been insane. It's like I went on a week vacation and then I came back to reality and the crypto market has gone insane because of what's going on. We'll also play a little bit of right or wrong as well. So a lot of great stuff coming up.

Producer:
But first and now of wholesome financial wisdom, it's time for the Quote of the Week.

Producer:
Another 241 special line quotes of the week here this week. A couple of good ones. And the first one is from Warren Buffett, the legendary investor. And, you know, of all things of all things money and Berkshire Hathaway fame there. He said, quote, Do not save what is left after spending instead band what is left after saving. I kind of turned that on its head. I love that.

Ed Cruz:
Absolutely. It only the oracle of Omaha could come up with quotes like this, right? I mean, when you think about it, I always talk about saving being an act of of discipline. Right. But when you when you put it this way, it's just it makes so much sense. And like I said, only Warren Buffett could come up with with a line like that.

Producer:
Yeah, it's a great one. It really, really is. And this one also, our number two quote of the week comes from a guy that you might have heard of named Abraham Lincoln. I think I think we're probably familiar with that name. And he said this, quote, The best way to predict the future is to create it. That's like a lot about taking control. When you think about that in a financial aspect, you know, taking control of your finances, control of things, you can, right?

Ed Cruz:
Yeah, absolutely. You know, if you some people say if you want it to happen, you have to envision it first. Right? And there's no doubt you have to create it. You know, when you when you sit there and think back, you know, maybe five, ten, 15 years, depending on your age, of course, and the path you've taken to retirement, when you sit back and think, you know, here, here's here are the things that I'm going to do to help me get to my goal in retirement. You know, you sit back, you think about that, you know, think now in the future, you know, if you can remember that, say, you know, am I getting to that goal? Have I have I gotten there and my little short? So if you were to sit back and think, what are you happy with? What have you done successfully? What have you done not so successful or who have you entrusted for that success and maybe have have come short? These are all things that, you know, again, we're we're creating this. Whether you when we hired that person, you know, we entrusted him, we we said he's going to create this for me. Or when you start putting a plan together and you envision that plan, you put it together. We always have to take responsibility for the things that we do. And again, thinking about this quote from Abraham Lincoln, you know, if you take responsibility for the things that you have tried to create for yourself and you fallen short. Just remember, it's never too late. We can help you get back to those basics and we'll be talking about that a little more.

Producer:
Yeah, absolutely. Well, it's going to be a great conversation there and a great quote from Abraham Lincoln.

Producer:
Come on down as we test your financial knowledge in. Right or wrong.

Producer:
And you can feel free to play along with us as we play right or wrong here on Prosperity Principles. And this is kind of how it works, folks, I'm going to present a statement to Edwin Cruz and he is going to tell us whether that statement is right or whether it is wrong. And you can, of course, take a quick second just before he gives us the correct response and give your response. See what you think there. Don't just don't yell at us too loud in the car or wherever you might happen to be. It hurts our ears, even over the radio. All right, here we go. Here we go. With right or wrong statement. Number one error is this Bonds are on track to have one of the worst years ever in 2022. Is that right or is that wrong?

Ed Cruz:
And before I answer that, you know, people will always associate bonds as being safe, right? So just remember that bonds also have risk. So. That's right. According to The New York Times, this has been one of the worst times for bonds since 1926 and maybe in centuries. And if we continue to see rising interest rates, it'll just set new records beyond that. Right. And so during times of rising interest rates, the older bonds that you are currently holding are worth less. And it's obvious because newer bonds have more desirable interest rates. And so this is why we recommend replacing your bonds with fixed indexed annuities to protect your hard earned money, eliminate fees, and guarantee yourself an income that you can never outlive. And again, risk bonds do have risks. So for anyone out there that thought that bonds provide you with that, with that nice warm blanket of security, it can for the most part. But there are periods that you're going to suffer and this is definitely one of them.

Producer:
Yeah, absolutely. We see that in those numbers. And, you know, talking about rising interest rates, we know they're rising. We know they're going up again. And so that situation doesn't appear to be getting any better, at least in the short term. So Absolutely great, great info there. All right. So that's that one was right. So, number two, in right or wrong, cryptocurrency is a safe and effective way to grow your money in a short amount of time. Has that right or is that wrong, Ed?

Ed Cruz:
Well, it depends on which client I asked, but I think they're all figuring out now that that that's wrong. Know cryptocurrency investments like Bitcoin offer no consumer protection or are incredibly volatile and I will say you know it's and it's sad but it's true I have a client that initially got into some of that bitcoin got in around 7000, jumped up to 20 and he asked me what I would do. I told them I would sell. And so he did part of that. And then the Bitcoin took it, took a dump and then, you know, all this. He's taking a lot of advice from his son. And sadly I say at times and of course crypto jumped up to 50. Everyone remembers he bought back in at 50, it climbed to 70 again. I told him, Boy, I think I think this is headed for some for some turbulent times. And he said, No, no, no. My son tells me it's going to go up to 100,000. And I said to him, You know, your son doesn't hold the crystal ball. I would definitely sell. I think this is too much risk for you. I said, although I know that this won't change your life. I said, But when it goes down and you lose your shirt, I know you're not going to be happy because you get to know your clients.

Ed Cruz:
And he held on to it. And of course, we all know that, that it's under 20,000 today. So he's taken quite a beating. And he just told me just about two weeks ago, he told me he wishes he would have sold it and listen to me, but maybe he's done listening to his son when it comes to this cryptocurrency advice. But one of the world's largest crypto investing companies as we all know, just filed for bankruptcy last week. That's FTC's and the CEO there, Sam Friedman, I believe his name is. So we all know that crypto is very, very volatile right now. I do own several, but I don't I don't bet the house on it. You know, I just put some in there and I'm thinking over the long term, five, ten, 15 years because of my age. And so, you know, for most of us that are near retirement or retired, please don't risk your hard-earned retirement dollars in the unregulated cryptocurrency market. There are safe investments out there that can provide you with market-like gains with no market risk. And that would be my recommendation for all of you that may be highly risk-averse.

Producer:
Yeah, absolutely. Because, yeah, if you're a risk-averse cryptocurrency, not the place for you. As we can see right now because of the high volatility there. But yeah, so we'll talk a little bit more actually about cryptocurrency coming up here in just a few and what's going on with it and play a piece that I actually put together not all that long ago about cryptocurrency. So so stick around for that just a couple of minutes away. Okay. So one right one wrong. Here's sort of the tiebreaker as we wrap up right or wrong with statement number three and it is higher in. Interest rates combined with a down market make now one of the most opportune times to consider a fixed-indexed annuity. Is that right or is that wrong?

Ed Cruz:
And that is absolutely right. With interest rates at their highest level since 2007, annuity companies are able to generate more interest that they invest into options. So again, rising rates lead to higher what's called participation rates and caps inside of these annuities. And but again, this is maybe this is a second we're at second level at this point. We want to stick with the basics. Give us a call. Let us get through telling you what the foundation is all about with fixed indexed annuities or fixed annuities in general. And I think you will greatly appreciate the opportunity that lies within these fixed-indexed annuities. You know, when you invest inside of a fixed indexed annuity, your money is tied to an index, but you're not directly invested in it, which is important because that's what protects you from taking that downside risk. Fixed-indexed annuity holders get to participate in the gains of an index, but are protected from any potential downside. So as we say in our industry, zero is your hero. And this feature of annuities allows people to sidestep the market and take advantage of gains without risking their principal. And when I explain this to people, you know, first thing I hear or a lot of times what I hear is how come no one's ever told me about that? And of course there are reasons for that that we won't discuss at this at this time. But again, fixed index annuities are definitely the place to be right now with rising interest rates.

Producer:
There you go. And that's exactly why you just explained it there. And the fact that the market has been so volatile, also offering folks that protection from that market risk is very, very important to a lot of folks right now. All right. So two right and one wrong and right or wrong, not so bad to two out of three ain't bad. I think that's not a song title. Two out of three ain't bad. I think it is anyway. I think well, you know, we mentioned we talked crypto in there and right or wrong and I wanted to actually play this piece that I did not all that long ago about cryptocurrency. And it actually features a great quote from one of the people who was in our quote of the week this week, Warren Buffett talking here. You know, it's really a good time to actually take a look at crypto because of the news that's been happening right now. And just remind folks about the risks and the dangers, really, of investing in what's really a volatile asset class. So let's take a listen to this piece that I call Take caution with crypto and we'll talk more about cryptocurrency and about this whole thing coming up just after this.

Producer:
So a couple of minutes here and we shall return. I'm Matt McClure with the Retirement dot Radio Network powered by Amerilife. If amusement parks are your kind of thing, roller coasters can be fun. But when it comes to investing for retirement, not so much. One of the most volatile investments around is cryptocurrency. That means, sure, there's some potential upside, but is it worth taking a ride on the crypto coaster? First, What is crypto anyway? The website Investopedia defines it this way. A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities. Bitcoin was the first such currency out there, so it's been the most talked about and face the most scrutiny. Like anything in life, crypto has its advantages and disadvantages. While it offers a faster and cheaper way to transfer money, its value is highly volatile. The technology has gotten some blowback from both sides of the political aisle. One of the most vocal critics has been Democratic Senator Elizabeth Warren of Massachusetts.

Elizabeth Warren:
Unlike, say, the stock market, the crypto World Currently has no consumer protection. None.

Producer:
Republican Senator Pat Toomey, ranking member of the Banking Committee, who generally supports the industry, also acknowledges there are issues with crypto.

Pat Toomey:
Now, it's important to note that many people have raised legitimate issues about cryptocurrencies. These include their use in illicit activity.And the possible effects on monetary policy and our.Existing financial infrastructure.

Producer:
But what do big time investors have to say about cryptocurrency? Here's Warren Buffett speaking at a recent Berkshire Hathaway shareholder meeting.

Warren Buffett:
Now, if you told me you owned all of the Bitcoin in the world and you offered it to me for $25, I wouldn't take it because what would I do with it?

Producer:
Still, cryptocurrency has legions of fans who swear by it and enjoy riding the daily roller coaster. So are you willing to risk your hard earned and hard saved money in a volatile cryptocurrency market? That's a key question to consider as you invest in your future. With a Retirement dot Radio Network powered by AmeriLife. I'm Matt McClure.

Producer:
So yeah, as we've been saying here, a lot of volatility in cryptocurrency. And you just heard there from from Warren Buffett, as I sort of teed up at the top, he said you could he said you could give me all the Bitcoin in the world and or you could offer me all the Bitcoin in the world and I wouldn't take it. He said, Well, what I'd do with it is like, you know, it's just a potentially completely worthless thing at some point. So he he definitely has his reservations about it, to say the least. And a lot of other people do as well.

Ed Cruz:
As do I. That's why I don't invest too heavily in that. In fact, quite light, I would add, and I've seen the decline prior to FDX. And and currently, you know, some of these cryptos are tied up in the in the court systems. They're trying to to to see if they're going to be labeled a security or just keep them out of from being a security. And you know, with seeing this this EFT, which is and we all know one of the largest cryptocurrency exchanges with it having filed bankruptcy, it's now under criminal investigation. So this is not going to help stop the the fluctuation inside of this crypto world. And Bitcoin suffered its worst week in in in five months and is now down over 75% or somewhere in that range over last year. So, you know, when we look at this, again, if you're going to be invested in it, do it more for the fun. You know, it's like saying, am I going to loan this money to my family or am I going to give it to them? You're better off giving that money to your to your family members and and not loaning it to them because you're going to be disappointed.

Ed Cruz:
And so, you know, I've I've bet on a couple of these things at a light range 500 to 1000 apiece about seven of them. You know, not the biggest deals. I do think that there is some type of place for cryptocurrency in the future. That's why I'm not banking on this right now. And of course, we've heard celebrities like Tom Brady, Shaquille O'Neal, you know, they made major investments in this now bankrupt company, while other organizations like MLB, Major League Baseball, the NBA, had sponsorship commitments with the company. So, you know, these people are heavily invested. They could they could be in big trouble. And of course, the CEO, they said that he lost somewhere around 94 to 96% of his fortune. He was one of those paper billionaires, as I call him. And, you know, we'll see where it leads to. But obviously, we have to be careful when we consider crypto as part of our portfolio. It can be a small part, but I surely wouldn't make it any major part of your portfolio at this point.

Producer:
Yeah, that volatility is nothing to nothing to sneeze at here. And you know, you mentioned it's funny because on the one hand you just mentioned people like Tom Brady and Shaq investing in and investing in the cryptocurrency market in that way. And a lot of other famous people have done the same kind of thing. Well, there are a lot of other famous people who actually have invested in annuities, people who are still with us today and going way on back toward like I'm talking about like the founding of the country way on back. So I wanted to play a little bit. We talked about annuity 360, the book at the top of the show. And folks, once again, you can get a copy of absolutely free of charge and free of obligation copy of this book by calling 386 228 5769. That's 386 228 5769. But a lot of famous folks who have invested in annuities, of course, you talk about volatility, you talk about safety, you think much more safe investment with annuities here. And let's hear Ford Stokes, the author of the book, read this chapter of Annuity 360. It's called Famous People Who Invested in Annuities. And we'll talk more about fees which are fixed indexed annuities and other things coming up just after this.

Ford Stokes:
Chapter three famous people who invested a significant amount of their hard earned wealth in annuities. Big idea. Annuities are for everyone. Even if you're not worried about outliving your wealth, annuities are safer for your money than investing in stocks or bonds, or simply not investing at all. Babe Ruth, known as the Sultan of SWAT, Babe Ruth, came into his glory days during the Roaring Twenties, and his manager was worried that he was blowing through all of his money without putting any of it away. He introduced Babe to an insurance agent from the Equitable Insurance Company, now AXA Equitable. From 1923 to 1929, the slugger contributed more than half of his salary annually, purchasing between 35,050 thousand worth of annuities each year. The Great Depression hit the country hard in October of 19. 29, Babe Ruth was forced to retire from baseball in 1935 due to health reasons. He was unemployed during the worst time in history. But Babe Ruth had his income annuity. It's been reported that he received an income of $17,500 a year, which would translate into an annual salary of more than 290,000. In today's dollars, his famous quote still resonates today. He said, I may take risks in life, but I will never risk my money. I use annuities and I never have to worry about my money. Steve Young. Steve Young was signed out of Brigham Young University into a $40 million contract with the US PFL. That was the headline, at least in reality.

Ford Stokes:
Young was given an annuity that would pay out something like $40 Million over the 50 years that followed. Given the fact that some players were not paid for playing in the final season or other seasons of the US PFL. Accepting the annuity appears to have been a genius move on the part of either Young or his agent. The annuity payments have lasted longer than the league, and it's safe to say that he's made more money than probably anyone else involved with the league. To be fair, it couldn't have happened to a nicer guy. Even with a large signing bonus and salary, he continued to wear old jeans and drive a 19 year old Oldsmobile dynamic. In addition to outlasting the league, that annuity even outlasted the Oldsmobile car company with a staggering number of pro athletes going broke after they retire. It's refreshing to read stories about players who made smart financial choices. Shaquille O'Neal, one player who's used annuities to his advantage is retired star Shaquille O'Neal. Over his 19 year career, he generated $292 million in total compensation. In retirement, he is projected to make as much as $1,000,000,000 from endorsements, even after his career is long over, thanks to a wise agent who made him put $1 million annually into annuities from his rookie year onward. Shaq lives off the income the annuity generates with his endorsement legacy for his children. Shaq scenario demonstrates how pro athletes and other prodigious earners can protect themselves against their own personal spending errors.

Ford Stokes:
Allen Iverson. Nba player Allen Iverson earned $200 Million during his career $155 Million in Salary and 40 to $50 Million in Endorsement deals. Iverson ended up going bankrupt because of his overly lavish lifestyle. In a December 2012 court filing, Iverson told the court that his monthly income was $62,500, but his expenses were 360,000. Luckily for Iverson, Reebok saved him from becoming destitute by paying him an annuity worth $2.3 million in 2001. Iverson made a very smart decision that would ultimately save him. He signed a unique endorsement deal with Reebok. Not only will Reebok pay Iverson $800,000 a year for life, they set aside a $32 Million trust fund that he can begin accessing when he turns 55 years old in 2030. Since he divorced his wife in 2013, he will receive half of the trust. Another way that Iverson will be able to protect himself against future bankruptcy is his access to the NBA pension. He is eligible for another $8,000 a month. The lump sum of this pension is between 1.5 and $1.8. Most pensions are set up with single premium immediate annuities. Benjamin Franklin. When Benjamin Franklin died, he requested that the 2000 sterling he earned as the governor of Pennsylvania from 1785 to 1788 be divided equally between Boston and Pennsylvania. He wanted the money to be dispersed as a legacy 200 years later in the spring of 1990. The balance in the Philadelphia account was valued at approximately $2 million, and the balance in the Boston Trust was about $4.5 million.

Ford Stokes:
This was sometimes called Franklin's IRA. The money in the Boston Trust was invested using a new take on an old idea. The annuity using a tax deferred index variety. The money was able to benefit from exposure to stock market growth without stock market loss. This allowed the trustees of the Franklin Institute in Boston to turn an estimated $4,400 into 4.5 million, even while it was paying out an income for 200 years. Beethoven. The social luminaries of Vienna, wanted to keep Ludwig van Beethoven from leaving their country. And so in 1809, two princes and an archduke guaranteed the musician a generous annuity. All he had to do was stay in Vienna and compose and perform his music. His benefactors have supposedly been quoted as saying something along the lines of only a man free of worries can create with such genius. Interestingly enough, Vienna also saw its time of economic downturn, and one of the annuities guarantors tried to stop paying Beethoven, claiming financial hardship. Beethoven sued, won and continued to receive his annuity payments. Perhaps this is what inspired the literary genius of Jane Austen, whose character Fanny observes in Sense and Sensibility. People always live forever when there is an annuity to be paid. An annuity is serious business. It comes over and over every year and there is no getting rid of it.

Producer:
Fixed annuities, including multi-year guaranteed rate annuities, are not designed for short-term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims-paying ability of the issuer.

Producer:
You're listening to prosperity principles. Visit MyProsperityTeam.com.

Producer:
And of course, you just heard a chapter from Annuity 360, the book that was called Famous People Who Invested in Annuities. Chapter three of the book, in case you're curious, and in case you want to see what all of the other chapters are all about, you can get a free copy of that book by going to MyProsperityTeam.com or giving a call to 386 228 5769. That's 386 228 5769. Now, we just heard about those these famous folks who've invested in annuities over the decades and centuries, even Ed but talk about what the benefits of something like a particularly a fixed indexed annuity is. You know, talk about what those benefits are that people might not necessarily be aware of.

Ed Cruz:
Absolutely. You know, the number one thing that I tell people is safety, right? We try to preach safety. And so 100% of your principle protection is one of the big keys of this. But I'd like to take that a step further because, you know, any time or any year that you go through and you lock in your gains, as we call it. So let's say you invest at 100,000. You just had a 5% gain, you have 105,000. And the market let's say the market goes down just like this period. What just be your 100,000 that's protected. You've got 105,000 that's protected. And I think that's important for people to understand that when we talk about 100% protection, we're talking about all of your investment and we're talking about all of your gains as well. So that means that you can never do worse than zero, right? So if market's down 5%, 10%, 20%, whatever it might be, you're never going to get a negative return. And that's important. Having market like gains without the market like risk should be on your mind. And participating in gains of an index should be of paramount interest to you, because if you just want protection, you could just go to a CD and get half percent 1%.

Ed Cruz:
But most people aren't interested in that. Most people, they want the protection, but they also want the gains to come along with it. And I can't think of another tool out there that provides you with both of these benefits. In addition to that, you know, we invest in in for one case, IRAs, areas like that, because as it grows, it's tax deferred. Well, if you have regular savings sitting with a broker, 100,000, half a million dollars, whatever it might be, and you have a gain or you're going to pay taxes on that gain, well, you know, why not earn interest on interest? So growing your money tax deferred is kind of another big interest that people have. You know, when they when we start talking taxes and they learn that by having their non qualified assets inside of a fixed index annuity or fixed annuity, they learn that they don't have to pay taxes on that money. So there's an additional gain there. We have annuities with fees, we have annuities with no fees. We have a combination of the two. So you get to control your fees inside of a fixed indexed annuity from zero up to, let's say, about one and one half, which when you think about it, is not bad at all because most of your retirement accounts are facing two, three, up to 4% in fees.

Ed Cruz:
And I've seen them higher, but let's say in general between two and 4%. So wouldn't you like to be in control instead of somebody telling you what you're going to pay in fees? And so let's close it out by saying instead of having that lump sum and not knowing what to do to make sure you don't run out of money in retirement, a fixed indexed annuity is going to provide you with an income that you can never outlive. How great is it to have a guaranteed income that you know, regardless of what the market does, that's guaranteed for you? So, you know, these are these are the primary principles of fixed indexed annuities. And again, when we talk about getting back to the basics, laying the groundwork, you know, this is where it begins and understanding really what you're what you're not happy with and just just picking up those pieces and realigning them. This is what we're talking about here. So think about what's not working for you and then compare that to the benefits that we can provide you.

Producer:
Now and there are a lot of benefits there. And we've just sort of really scratched the surface of the benefits of fixed indexed annuities and and annuities in general. And especially when you talk about the safety aspect, that was, of course, number one on the list there of of benefits. When you talk about the safety aspects. We mentioned it earlier on the show where you were talking about bonds and the losses that people have seen in the bond market this year with interest rates going up. Right. So we talked about that. So this means really, I guess when you look at it, just even on the surface, even if you just scratch the surface here, because we're getting back to the basics today, we're just scratching the surface. This seems to me anyway, like for a lot of folks, it could be a great alternative to having your, quote unquote, safe investments be in the bond market.

Ed Cruz:
Yeah. You know, if you if you think about, again, going back, annuities have been around since the Roman time. So you want to think about laying the foundation. I mean, it's probably written in stone somewhere when we talk about that. So, you know, thinking about indexed annuities, thinking about where you could lose if you've lost money on bonds this year. And we expect that you have, because The New York Times says that this has been one of the most devastating time for bonds since 1926. So we're going back almost 100 years then we think it's a good idea to consider a bond replacement strategy. So contact us today. Let us help you delete the fees that you're paying on your bonds and stop the bleeding in that portion of your portfolio.

Producer:
It's a great thing to do to reach out and call 386 228 5769. Is that number once again MyProsperityTeam.com dot com is the website and while we're on the subject here and of the replacing bonds with fixed indexed annuities that actually happens to be the title of a chapter from Annuity 360. So we're getting double in your money here for goodness and absolutely free goodness from the Annuity 360 book and of course folks you can get a free copy of it by contacting Ed at either one of those contact methods I just mentioned. And we'll repeat them here in just a moment. But first, let's share this chapter once again. This is Ford Stokes reading from the book Annuity 360, and the chapter is chapter 15, its bond replacement with fixed indexed annuities.

Ford Stokes:
Chapter 15. Bond replacement with fixed indexed annuities. Big idea. Historically, bonds have seen volatility when the market is volatile. Fixed indexed annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial advisor talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. Am I firm active wealth management? We believe this is a smart way to protect your future. Many people have learned that bonds are a safe way to invest your money, but there are some downsides to bonds that should make you think twice. We'll talk about some reasons why you should consider replacing your bonds with annuities. First, here's some information on the history of bonds in the United States. Historical bond volatility. The 1900s saw two secular bear and bull markets in US fixed income. Inflation peaked at the end of World War One and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The US government kept bond yields artificially low until 1951. The long term bond yields were at 1.9% in 1951. They climbed to nearly 15% in 1981. In the 1970s, globalization had a huge impact on bond markets. New asset classes such as inflation protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created.

Ford Stokes:
Early investors in these new asset classes were compensated for taking on the challenge. The bond market was coming off its greatest bull market coming into the 21st century. Long term bond yields declined from a high of 15% to 7% by the end of the century. The bull market in bond showed continued strength in the early 21st century, but there is no guarantee with our current market volatility that this will hold. See Chart 15.1 to see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this Why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history alone. You can see how uncertain the future of bonds is. Inflation and fluctuating interest rates play a big role in bond yields. Interest rate, risk of bonds, bonds and interest rates have an inverse relationship. When interest rates fall, bond prices rise. Due to the COVID 19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option. However, this has caused bond yields to fall to all time lows as of May 24, 2020. The ten year Treasury note was yielding 0.64%, and the 30 year Treasury bond was at 1.27%.

Ford Stokes:
Reinvestment risk of Bonds. This is the likelihood that an investment's cash flows will earn less in a new security. For example, an investor buys a ten year, $100,000 Treasury note with an interest rate of 6%. They expect it to earn 6000 a year At the end of the term, interest rates are 4%. If the investor buys another ten year note, they will earn 4000 instead of 6000 annually. Consider the possibility that interest rates change over time when deciding to invest in bonds. Systematic market Risk. This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpredictable and it is impossible to avoid. Diversification cannot fix this issue, but the correct asset allocation strategy can make a big difference. Unsystematic Market Risk. This type of risk is unique to a specific company or industry similar to systematic market risk. It is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes coming to the industry. However, there is no way they can know how those changes will affect the market. There are two factors that contribute to company specific risk business risk.

Ford Stokes:
There are two types of risk. Internal and external. Internal refers to operational efficiency. An external would be similar to the FDA banning a specific drug that the company sells. Financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading reduced advisory fees. Investors who trade individual stocks may know how much commission they are paying their broker, but individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds they sell called markups, but they bundle them into the price that is quoted to the investors. This means you are unaware of. How much commission you were actually paying. Standard Poor's estimates of bond markups is 0.85% of the value for corporate bonds and 1.21% for municipal bonds. However, markups can be as high as 5%, up to $50 per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time, unlike an annuity which provides income for life. You must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss, as we discussed above. Annuities will provide you with an income you can never outlive.

Producer:
If you've got money questions, you've found the place for answers. This is Prosperity Principles with Ed Cruz.

Producer:
And you just heard once again from Ford Stokes, the author of Annuity 360. The chapter of the book you just heard is bond replacement with fixed-indexed annuities. So much great information in there. And you can get a free copy of the entire book, absolutely free to you with even more great information. A ton of it, actually. MyProsperityTeam.com is the place to go. That's MyProsperityTeam.com or you can call the number 386 228 5769. That's 386 228 5769. Now, add another thing that our listeners can do when they call that number or go to the website is request a free full retirement plan consultation. And when I say free, I mean free. It's absolutely free of any cost, any obligation. Tell the folks a little bit more about that and what that kind of opportunity for them is.

Ed Cruz:
Absolutely. This complimentary consultation, just like the book, there's no no risk to to make this request. You know, we just want to share information with you. You know, I always want to find out, you know, when people call me and, you know, they want to improve the situation, I want to find out what you what you know about your own portfolio, because that helps me to understand what your true needs are, you know, what type of information you're needing, what you need to understand the foundation, you know, what got you to that point. So when we provide you with this free consultation, we want to make sure that you're comfortable and you only work with us if you feel that it's better for you. I don't want to sound like your last guy. I should be different. And if I'm not different, you should just pass me. Pass me on by. Right. If we're not talking about what level of risk you're willing to to attain, what type of tax savings you're looking for right now, what type of guaranteed income you're looking forward to in the future. You know, when something happens to you, if you are the primary planner, do you want your wife to struggle through through her retirement after you're gone? Or do you want her to just kind of carry on from where you left off? You know, these are very important things that we have to consider, especially our spouses.

Ed Cruz:
And if you don't have a spouse and your kids are going to inherit this, what type of jam are you going to leave them in? Trust me, I've seen all types of issues out there where the children are left scrambling. They can't get to it. It's got to go through probate. Let's avoid probate. Let's get this thing streamlined. So there's a lot of things that we do to help you, you know, and again, this is why we always say that we analyze your specific and unique financial situation because it is different for everyone. You know, somebody may have a trust, somebody may only have a will, somebody has a combination of the two and some have neither of the two. So, again, there's so much that we have to discuss here. But when we sit down and go through it, believe it or not, for the for the amount of questions that I have, time can go by really fast. You might sit there for 45 minutes and just think that we're scratching the surface.

Ed Cruz:
But again, it's important, right? Health is number one, finances and number two. So we shouldn't shortchange ourselves. If you're looking for shortcuts, you're never going to you're never going to make it to the pinnacle, to the top to to the best that you can, that you can make this retirement Plan B. So let's not take any shortcuts. Let's look at what you're paying in fees. Let's cut out any unnecessary cost. Let's go over your four one case. Let's assess the risk. And again, we can help you. As we said, we have a week left in Medicare here. Social Security planning is a whole different beast. But again, we have outlines. We have all types of information to maximize your income and Social Security. And there's there are a lot of seniors out there that make mistakes and take in Social Security. And if you have a disabled child, do you have additional benefits? If your wife is still not of age, can she take some early benefits? There's all types of questions. There's all kinds of ideas that we can share with you to help maximize anything and everything coming coming to finances. So give us a call and let's cover these things.

Producer:
And that number once again, folks, is 386 228 5769. Or you can go to the website MyProsperityTeam.com reach out to Edwin Cruz get your free as we say it again free everybody loves that word it's a free financial consultation just for you personalized and you can get it by contacting Edwin Cruz today.

Producer:
Here's the cost cutter of the week.

Producer:
Well, of course, with inflation being what it is and continuing to be what it is, you know, we just went through the Thanksgiving holiday here and we were talking about how much more expensive the turkey and the stuffing and all all the other things, how expensive all that is. Well, it's continuing, yes. But we want to give you ways, folks, to cut some costs. And that's what the cost cutter is all about. And we're actually talking about a specific type. And you might say, wait a minute, why are they bringing this up? But it's a specific type of life insurance that we want to talk about in our cost cutter segment today and get us into this. Talk about what we refer to in the biz as Iolaus.

Ed Cruz:
Yeah, You know, it's gift giving season, right? Here comes Christmas. So here's one of those gifts to you. And again, it's free investing inside of us. Like you said, indexed universal life plans. There they are pre retirement plans, and they'll help you eliminate future tax increases and generate more tax free income starting at age 67 and throughout retirement. And, you know, I've read about this before, and I will say when we when we start talking about ages, we have recommended ages, of course, for people that are retiring over the next five, ten, 15 years. But in are you Well, if you retire early, you can actually start this up earlier than than full retirement age when it comes to Social Security. But if you want to maximize it like all other income streams, you give it a little more time. And as I say, sauced and seasoned, it will give you more income. And so here's a little example. So a 55 year old man invest 2000 a month into a ten pay IUL for ten years, and then he no longer has to pay any monthly premiums. After ten years, it's estimated that he'll be able to take tax free withdrawals of $25,600 each year, starting at age 67 for the rest of his life.

Ed Cruz:
And we'll have 480,000 of a death benefit to protect his family and case. He should pre decease if he dies sooner than what expected. So this is a way again, like I said, what situation do you want to leave your spouse in or your children and or anyone else that's depending on you. These are ways that you can help protect not just yourself, but your family. And, you know, when we think about it, you know, there are all types of investments if you die too soon, Well, there's no true life insurance, tax free death benefit. But with this IUL, it will give you income and it will give you a great death benefit when you pass on. And you know, the interesting thing is that there are only two types of truly tax free investments, and that's the life insurance that we just discussed. And Roth IRAs. So why not take advantage of both of those and generate tax free income or tax free withdrawals from those two types of accounts? Both of those will save you 20 to 30%. By eliminating the tax burden on distribution. And again, we don't want to have Uncle Sam as one of our beneficiaries. So these are two great ideas. Merry Christmas.

Producer:
Yeah, there you go. Absolutely. Free of charge or free gift to you, everybody. And hey, if it's a free gift and you can save some money and you can pay less in taxes over the long run, that's a win win win for everybody involved. Well, the last several minutes of the show here, Ed, but we're going to talk about we see this up at the top. We're going to get to it here. Back to the basics. And this time around, when we are talking about getting back to the basics, we're talking about the rule of 100. To tell people they might have heard this, talked about maybe with their advisor, retirement planner, professional, whomever, but they might say, oh, I didn't quite my my head didn't quite get wrapped around it. So talk about the rule of 100 for the listeners here at and let them know exactly what that is.

Ed Cruz:
You know, and you'll be surprised when I speak about this. And I asked them if they've ever heard of the rule of 100. About one out of every ten have heard about the rule of 100. At least that's my experience. It may not be the experience everywhere, but in our area, that's what I've seen. And the rule of 100 is really a simple rule. And it just basically says that you should take the number 100 and subtract your age from it. That results in the maximum percentage of the money that you should have at risk. So, for example, if you're 60 years old, then minus that from 100 and it says that you should have about 40% maximum of your assets at risk because you have less time to make up for any big losses, you know, converse. Conversely to that, if you're 30 years old, that means that 70% of your assets should be at risk or can be at risk because time is on your side. And I know there's a song there. So investing during retirement involves managing risk, right? And we talk about that all the time. And that's why we love annuities, because your money is 100% protected and it provides you with an income that you can count on and use each month.

Producer:
And that is really what it's all about. It's getting back to the basics. Getting something simple here. I like these because when people people hear the word rule and they're like, Oh God, what is this? I have to follow. And he knows it's going to be complicated. But no, it's just you take 100, you subtract your age from it, and that's the percentage of your assets that should be at risk. And of course, as with anything, it's not necessarily a hard and fast rule. There could be some particular circumstances in your particular financial life, in your in your profile that say, oh, maybe you should you can have afford to have a little bit more at risk because of X, Y, Z, or maybe you need to have less at risk because of this, that or the other. So, you know, that's why it's important. Yes, the rules here are really kind of more guidelines and really good advice. But you've got to have in mind that your financial situation is completely unique to you. There's no other you in this world. And then that's true on a personal level, on, you know, there's there's nobody like you. We're all individuals and there's nobody just like you when it comes to their financial picture either. So that's that's a great reason why it's important to get that that advice.

Producer:
Want to know where your hard earned money is going. It's time for an inflation demonstration.

Producer:
Well, we talk about it all the time. It is inflation demonstration time because it's on everybody's mind and it's making everybody's wallets lighter. And this time around and we're talking about diesel prices, they're on the rise again, huh?

Ed Cruz:
Absolutely. In fact, we had here about a month ago, we had a couple hurricanes come through. Right. And everything is when we think about everything is oil based anymore. Right. From the shingles to, you name it. And this contractor I was talking to, he was telling me about the diesel prices, you know, because he had a he had one of those big old Dooley trucks with the diesel engine in it. And, you know, he told me he's paying over $5. And, you know, recently when I went on a short road trip, I noticed those prices. The lowest I think I saw was 489. I saw them as high as almost five and a half. And so when you think about that, you think about all of our goods and services being trucked around our country. Diesel prices, that over $5 on average. You know, this is this is making for an expensive time. And, you know, we saw inflation ease up a little, I think, from 8.3% down to 7.7. But that was temporary. And now we've seen that oil prices are going back up, gas prices are going back up. And so diesel prices have increased by 33% for November deliveries and are expected to go higher. And diesel prices, like I said, affect everything from food and other essential goods. So, you know, let's get ready here again. Here comes Christmas. I hope everyone makes it through just fine. And then hopefully we have a couple extra dollars in our pockets after this holiday season.

Producer:
And that's that's right. That's the plan. If you've got and if you have a diesel, if you got one of those big Dooley's or if you've got something something else that you're driving around, you're definitely feeling it in the wallet. Maybe, you know, leave that at home over the holidays and take the minivan wherever you're going. I think that might be a good a good idea to help you not get your wallet lightened any more than you absolutely have to. But yeah, the diesel price is kind of crazy here. Well, that's about it for the show this week. And of course, this has been prosperity principles. I'm Matt McClure, the the producer, the co host here, along with the man of the hour himself, Mr. Edwin Cruz. And and of course, I've had a great time. I learned a lot again this week. I always seem to, but I appreciate you and all of your wonderful advice and knowledge that you bring to the table here. And I really do appreciate it. And I will see you next time around.

Ed Cruz:
Absolutely. And thank you to all the listeners out there.

Producer:
Thanks for listening to Prosperity Principles. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard-earned money to schedule your free no-obligation consultation. Visit MyProsperityTeam.com or pick up the phone and call 386 228 5769.

Producer:
Not affiliated with the United States government. Edwin Cruz does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. AmeriLife assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as-is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or of the results obtained from the use of this information.

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