Even high-level traders are finding that specific types of annuities can compliment a portfolio by solving for the longevity risk of outliving your money. These unique transfer of risk annuity strategies are explained here by Stan The Annuity Man.
There’s nothing like a MoneyShow show attendee or MoneyShow.com reader. Market savvy, educated, well read, opinionated, confident, and open to new ideas. But when it comes to annuities, it’s like throwing a garlic light at a vampire! Annuities! Those “non-investments” are for simple-minded fly-over types that troll the weekly bad chicken dinner seminars for their next meal. Right?.....well maybe.
I have officially “burnt the boat” when it comes to annuities. That’s all I do. That’s all I recommend. I’m so “committed” that I call myself and my company…Stan The Annuity Man. I’ve been a regular speaker, sponsor, exhibitor, and supporter of all things MoneyShow, so I am very familiar with the valid argument that traders and stock-market-type investors have against annuities. I get it. But ever since the volatility of 2008, I have seen a trend of high IQ investors using annuities as non-correlated assets, and for what they were designed to do…transfer risk.
A lot of my clients, surprisingly, are high-octane traders that consistently roll the dice with a running start when it comes to their investment strategies. One such client is a top corn futures trader that sits in his penthouse overlooking the Atlantic Ocean, and consistently dominates his world of corn. When “Trader Jim” (let’s call him that) approached me at a past MoneyShow event a few years ago with what he called a unique idea, I thought he was going to describe his quant trading strategies and how Wheaties (i.e. made from corn) should actually put a picture of him on their cereal box.
Instead, “Trader Jim” started telling me about his past military background, his kids, and his wonderful wife who he said could care less about markets and how good he is at his craft. In other words, “Trader Jim’s” trading secrets and capitalistic instincts were going to follow him into the grave. His wife was so disinterested in all things having to do with the market that she was doing some power shopping at a local high-end mall instead of listening to all of the “master of the universe” presentations at the MoneyShow event. The gall! How could she?
What “Trader Jim” wanted to set up was a lifetime income stream for his wife because she definitely didn’t care about trading algorithms or candlestick charting, and voiced that sentiment to him repeatedly just to make sure that he was crystal clear on the subject. All she cared about was lifestyle. To be more specific, she only cared about her lifestyle, her kids’ lifestyle, and her future grandkids’ lifestyle when Jim finally went to the final corn trading pit in the sky.
So my new friend “Trader Jim” and I set up a regimented and disciplined plan to take some of his trading profits at specific dates throughout each year and buy a target-dated lifetime income annuities for both him and his wife.
What we set up was a target-date income plan using fixed annuities that would guarantee that she would never outlive the money and the insurance company would never keep one penny, meaning that all unused proceeds would go to their beneficiaries. The two strategies used were fixed annuities with attached income rider benefits, and longevity annuities (aka: deferred income annuities). Here’s how they work, and how you can do the same thing as good old “Trader Jim.”
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