Asset Protection Associates
"Change is the law of life." John F. Kennedy
"Progress is impossible without change, and those who cannot change
their minds cannot change anything." George Bernard Shaw
I agree with both Kennedy and Shaw. Too often, we are advised to stay the course, hang on, don't make any changes and either the market will rebound or interest rates will increase. Unfortunately, most people have not recovered their losses from the stock market's high point in 2007. In 2008, when the economy faltered, investors lost an average of 38 percent of their invested money. If you were able to earn 9 percent annually on your remaining principal, it would take you approximately seven years to break even, and if you earned five percent annually, it would take more than 12 years to recover.
We as individuals and we as a country need to pursue a new path in order to prevent future losses. In light of the country's present national debt exceeding $14 trillion and hundreds of bank failures each year, one has to wonder whether or not there is any way to extricate ourselves from debt. If you are fortunate enough to be debt free and have saved money but are concerned about how to best see it grow, then you must consider a new line of thinking. Remember what Einstein said: "The definition of insanity is repeating the same thing over and over and expecting a different result."
Everyone has what I call a financial toolbox from which to choose the tool that will best serve their needs. There are two categories of tools: one type has the potential for large gains but carries the potential for large losses. The second category of financial tool provides safety of principal, you forego greater gains for preserving your principal and accept a reasonable rate of return.
In 1995, the insurance industry created a financial tool called an index annuity. It is designed to protect your principal, combat inflation, and provide a portion of market gains every year. During negative years in the economy, the index annuity holds onto everything it has accumulated, so you never lose ground. The primary advantage to this type of vehicle is that it is like a dependable car that will take you to your destination without breaking down. This means that you will arrive ahead of other vehicles that are built to take risks that cause your savings to diminish. Warren Buffet, has been quoted as stating that the first rule of investing is, "Don't lose money" and the second rule of investing is, "Don't forget rule number one."
Since 1970, there have been 14 negative years in the economy. Most economists agree that it will be several years before the economy improves. There is also widespread agreement that to help pay off our national debt, the government will raise taxes next year. That means we will have less money to save for retirement which is all the more reason to adopt a financial vehicle that allows your funds to grow tax deferred. A guaranteed principal annuity is such a vehicle. Funds deposited into a guaranteed principal annuity grow on a tax deferred basis until you are ready to use the funds. Withdrawing funds can be done in a manner that creates primarily tax-free income or tax- advantaged income.
Considering that the current economy is weak and that it will take years to recover, one must utilize an asset preservation tool that first and foremost protects savings that one has worked hard to accumulate.
Arthur Miller is the owner of Asset Protection Associates, a retirement planning and insurance firm. Asset Protection Associates is located in Highland Park, Illinois and may be reached by phone at: (847) 433-1220 or e-mail at: assetprotectionassociates@gmail.com. Visit the Asset Protection Associates website at: [http://www.assetprotectionassociates.org]
Arthur Miller is the owner of Asset Protection Associates, a retirement planning and insurance firm in Highland Park, Illinois. He specializes in retirement planning, insurance, company benefit plan analysis, transitional planning, estate planning, and family financial survivorship guidance. In addition to personal consultations, Mr. Miller conducts workshops on asset protection for corporations, organizations, and individual groups throughout the year. Mr. Miller is a member of the National Association of Insurance and Financial Advisors, the Financial Planning Association, and a licensed insurance sales producer. Asset Protection Associates is located in Highland Park, Illinois and serves clients in Chicago's North Shore and the Greater Chicago area. Asset Protection Associates may be reached by phone at: (847) 433-1220 or e-mail at:assetprotectionassociates@gmail.com. Visit the Asset Protection Associates website at: [http://www.assetprotectionassociates.org]
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