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Creating Certainty From Uncertainty


 With a future outlook of volatility and uncertainty in the US stock market, ongoing concerns from Brexit, and the eventual end to the 2nd longest bull-run in US history, US national debt surpassing 20 trillion a year, growing by 3 trillion a year, and what many experts have predicted, tax rates that could double by 2023, a 70% chance of having a long-term care incident in your retirement; the questions remain:  How do you create certainty from all this uncertainty? How do you protect your retirement assets from market losses? How do you create safe and productive rates of return that will outpace inflation and make sure you are insulated and buffered from higher taxes? How do you protect against a long-term care incident that could devastate your retirement? How will you possibly mitigate these risks?

Here’s a recent article on this issue from NewsMaxFinance, written by Denis Kleinfeld:

Investors Look to Life Insurance for Durable Growth and Income

“It will not be possible to turn the American economy around for a long time.

The best the government can manipulate its growth figures is 2% on a good day. Many estimates put projected growth at 1.5% or less. The economy is in a stall – because of the Federal Reserve’s the zero interest rate program and trying to force inflation on the economy. This enables Congress and the administration to spend without limit and for the Treasury to pay for it all by selling bonds. Given the level of institutionalized corruption in Congress, the Administration, and the Federal Reserve, the US economy probably can’t be returned to any reasonable semblance of a free-market for a decade or two. The government-created distortions to the marketplace are not easily squeezed out. Not by the existing crop of corrupt politicians responsible for the creating the vast regulatory and welfare state and smothering the economy with taxes.If any investor is to create a financially durable future for themselves, they must find a means that, within some reasonable risk, can provide both growth and income sheltered from the ravages of excessive taxation.Investing for medium to long-term time horizon requires an ability to execute a buy and hold strategy as necessary. Looking for generating income means that whatever is the investment vehicle, it must be able to shelter the returns from being savaged by current income taxes. What are the alternatives that can meet these two goals?

Photo of two elderly people having conflict in marriage

For growth, the investor must be able to invest with some institutional fund or organization that can weather the ups and downs of the market and ride out its volatility. For income on a tax-favored basis, the investor will look to qualified pension structures or insurance type contracts like life insurance and annuities. An article I read recently talked about Harvard’s endowment and how poorly it was doing even with investment management using 200 professionals in-house. Apparently, they get paid similarly as any other fund investment advisors. The result is that Harvard is paying millions for investment advice that generates zip for returns. 

Yale outsources their endowment investment, watches closely the fees they pay and does a whole lot better. Private investors looking for income consistently are stuck with passively investing in fixed income investments which have low expected returns, little hope for capital appreciation, and with a higher anticipated illiquidity premium. 

Insurance companies offer to investors the opportunities enjoyed by the big university endowments Yale’s. Similarly, insurance companies can execute buy and hold strategies and ride out the gyrations of the markets. Their need to provide outlays is projected over a long period so the pressure to current generate income is ameliorated. For investors, buying into a cash value life insurance contract can provide a guaranteed minimum return. With multiple sources of income drivers. these sort of contracts can provide for an additional payment in the form a policy dividend. The income build-up on the policy is on a tax-free basis. The cash surrender value can be accessed by borrowing on a tax-free basis. Should the insured pass away, the insurance death benefit proceeds will be received on a tax-free basis. For the individual investor, cash surrender value life insurance provides an opportunity for stable, consistent, and predictable returns while being resilient to credit and market risks, regulatory burdens, and yet unknown macroeconomic conditions. For investors looking for a durable investment for income and growth, then a cash value life insurance contract is at the top of the list.”

These are the questions that very few who retire today can answer or have retirement plans that properly address these concerns. Conversely, these are the very questions that my firm will help answer to equip clients to retire effectively, efficiently, and to protect against all of these risks.

Please feel free to contact Melissa (952) 240-8861 to schedule a call or meeting to discuss with me personally.

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