SAFE ALTERNATIVES TO BANK C.D. ACCOUNTS

I reported in the Gold River Community Newspaper earlier this year that:  "Yields for safe investments like c.d.s and treasury bills are down."  Smart investors that need safety, tax deferral, and probate avoidance are looking towards traditional fixed annuity savings accounts that feature higher before tax yields; and tax deferral until the money is spent or the owner dies. Current 5 year bank c.d. rates are under 3% with the interest taxed as earned. (Source:  Bank rate .com)
  The bottom line is that there are safe alternatives to traditional accounts that can offer higher yields even if your goal is to take immediate income.

5 year Guaranteed Annuities : These accounts feature a locked in rate for 5 years while the interest unlike a bank c.d. is tax deferred until received by the owner or a beneficiary.
The annuity owner can start spending the interest after 30 days; or defer taking the interest until retirement. Some companies allow a complete refund at any time. Consult your broker for a rate search comparison and advice. 

Indexed Annuities: These feature 2 different interest crediting methods within the same account:  1.) Interest is determined by yearly or monthly changes in an external index; such as the S&P 500.  Unlike a mutual fund; you cannot lose principal if the product is held until the end of a term; usually 7 to 10 years.
              2.) High Guaranteed interest crediting for income purposes only.  Some companies feature guaranteed crediting on a separate income account of as high as 7% compound interest with no fees on the income account at all.  that means a deposit would double for income purposes in as little as 10 years. These accounts charge around 1/2% fee annually on the first account if you surrender or re-invest the money. There is no fee against the income rider account which makes them ideal for IRA or other retirement monies.

Immediate Annuities:  These feature immediate guaranteed income that you cannot outlive; but on the downside are designed for income only and not as flexible as the other accounts above if you need emergency cash.  They often can be used as a vehicle for protection from creditors since you give up control of the principal in exchange for high guaranteed income.

In general, if you want safety, future income from existing assets, tax deferral, and probate avoidance; annuities of all types out perform most safe savings vehicles. This article is not meant to be taken as investment or tax advice and it is recommended that you always consult with an honest and capable planner, insurance broker, as well as your tax advisor or attorney while making financial decisions.

What Type of Life Insurance is Best?

Life insurance can be made simple: Even though there are several plan categories and names; there are only 2 distinct types: permanent and temporary life insurance, There is no 1 company or insurance plan that is suitable for all situations..  The main thing you need first is an experienced and objective broker that represents several of the top insurance companies without any quotas or product bias.

TEMPORARY NEEDS:Guaranteed level term insurance.: The rates are guaranteed to stay level with no rate increases for 10,15,20, or 30 years. This is pure insurance with no cash values attached; but as a result it is less expensive for short term needs like covering the liabilty of a mortgage obligation than any other insurane type.

Level term with a premium refund at the term end: This is called return of premium and refunds all paid premiums if you are alive at the end of the term. In general, the 30 year plan is a great solution for mortgage life insurance since it is reasonably priced and refunds all premiums if you quit the policy in 30 years.  
You normally have the option of keeping the insurance after the term is up; but you are guaranteed a refund of all premiums paid if you decide to take the refund and cancel the insurance.

No lapse universal life, guaranteed to age 120: This is often the least expensive way to insure a person's life over their entire lifettime; even if you live to age 120!   It features low premiums that never change even if you live to age 120. This does not have increasing cash values; but is a lower commission to the agent, and a lower premium to you as a result.

Cash value permanent plans: These are typically sold as a supplement to retirement through policy loans that are tax free. This is often sold where it should not be and requires an objective broker that can advise you of BOTH the pros and cons of this insurance.

Whole Life Plans: These feature guaranteed level premiums but can be as much as 3 times the yearly premium commitment of a universal life that features less cash build up at a much lower cost. Contact me directly for a no obligation rate search of the top 100 insurance companies for your specific need. Refer to specific policy wording for details on any policy offered to you.

Randy Taylor
Randy Taylor Financial
Serving over 4,000 clients for over 27 years!
1(916) 601-5270

Tax Deferred Savings Accounts Tied to the S&P Stock Index

Indexed annuities:
I have published articles nationally and at the state level on this concept since their inception, 1998. Please call me for more details at (916) 601-5270.

Indexed annuities are unlike any product in the marketplace. By legal definition they are a fixed annuity product, but with greater potential returns than those provided with guaranteed rate annuities. All fixed annuities feature not only safety of principal; but also minimum interest guarantees.
Indexed annuities allow you to benefit from potential gains when the stock market is up, but also prevent you from being penalized when it’s down. Unlike a variable annuity or mutual fund, the risk of losing your money due to a market decline does not exist with indexed annuities. So even if the stock market were to go down in value, your annuity contract value can never decline:
IN A DOWN YEAR ZERO % IS ADDED TO YOUR ACCOUNT INSTEAD OF A NEGATIVE. THAT MEANS YOU GET TO KEEP ANY PRIOR YEARS INTEREST. (See attached chart for an example) . In addition, like all fixed annuities, you’re protected by a lifetime guaranteed interest rate.

Income enhancement riders:
You can give up about ½% of your gain and add a rider that guarantees a high guaranteed crediting rate for income purposes of as much as 8% until income is taken. I recommend a computer printout example based on your age of how this gives you high guaranteed income no matter what the market indexes do!
As stated above, Indexed Annuities offer the potential of higher returns without exposing principal to market risk. In exchange for this guarantee of no downside risk, Indexed Annuities policyholders must generally be willing to give up some of their upside market potential. In exchange for having their retirement assets fully protected from loss (and in fact, a gain is guaranteed) an indexed annuities owner shares in market gains without realizing 100% of the gain or 100% of the loss. IN A DOWN YEAR 0% IS ADDED TO THE ACCOUNT, NOT A NEGATIVE. (See attached chart for an example). For most individual investors who have recently been stung by market volatility, this constitutes a prudent and desirable trade-off.

All of this is usually accomplished by linking (indexing) the credited rate to an equity index, such as the S&P 500 Composite Stock Index. To repeat: although the credited rate is linked to stock market performance, safety of principal is assured. A decline in the stock-market will NOT reduce the asset value of indexed annuities.

For a more in depth discussion of indexed annuities, their features and benefits as well as various product designs, please contact: Randy Taylor at  (916) 601-5270. Resident License number since 1983 : 0643596


CNBC NEWS VIDEO OPINION: The client calls in and the news panel gives candid comments about the gains realized in the sideways market; and also on safety: Copy this link to your url address or simply click here:
http://www.youtube.com/watch?v=iOyXfcB9r6s

( Feel free to request a vital signs report on any insurance carrier. The report is free and will disclose financial strength ratings from 5 different rating services.)