Wouldn’t it be nice to have a “guarantee” on your investments?
Trying to find that sweet spot in your investment strategy for security and Guarantees can be harder than some people think. However; I have a theory on why that is and I want to share with you what that theory is. Please remember that this is just my theory, although I will use many facts to support what I am saying, this is still just my “opinion” – if you will.
Doing a simple search on Google for “Fixed Income Investments” will yield you some pretty interesting and eye opening results. Several very reputable organizations will populate on the first page of your search results including brands like Investico, Fidelity, Pimco, etc.
Here is the definition result that was pulled from Fidelity on the first page of Google when searching “Fixed Income Investments”. ”
“Fixed income investments generally pay a return on a fixed schedule, though the amount of the payments can vary. Individual bonds may be the best known type of fixed income security, but the category also includes bond funds, ETFs, CDs, and money market funds.”
My Concern here is that we maybe have been lead astray by the ever so common strategy of investing set forth by large wall street corporations that have not seem to really change very much from the large stock market crash of the 20’s, Late 90’s, Late 2000’s or even todays Covid-19 Pandemic triggered Market corrections. Why is it that we continue to refer to fluctuating market volatile investment products as “Fixed Income”?
Well, let me explain!
Many of these different investment strategies are called “Fixed income” because often times they have a fixed rate of return. This is referring to the interest that you may have credited to your portfolio as a result of the performance of the investment. However; here is where my big fat opinion comes in to play. Does it not make sense to stop slapping a “fixed income” label on something that is only fixed for a temporary period of time. In my minds eye, this becomes “non-longterm-fixed”. I would argue that fixed income is a definition that is better fit for products that give you a fixed stream of income that is contractually set and will remain the same for the life of the person who is receiving that income. I would also argue that most average people who are simply trying to get the most out of their retirement income would also agree.
So then, why is it that when we search “fixed income investments” on the broad web, we are getting this same old rhetorical answer?
Here is the answer!
The majority of investment advisors have bought into the idea that there are some types of products out there that are always, no matter what, inherently “bad”. I for one believe, if you have any sense of critical thinking in your noggin, you might think that it is a virtue to ask questions, and make your mind up for yourself. I am not suggesting that you should not follow the leadership of a designated professional. However; I think its important for us to sometimes ask “why”? Why do most investment advisors hate these products so much that they would be unwilling to assist their client in acquiring one even if the concept makes most sense?
This may surprise you, but; I am not going to say it’s “about money”? Because in my eyes, it’s not; it’s about passion and ego most of the time. You see, I heard an investment advisor once say, “anything you can do with an Annuity, a good investment advisor can do a different way and do it better”.
PUMP THE BREAKS!!! WHAT!?..
I have heard some whoppers in my day, but this one to me is outlandish. It is not fair to the client, nor their loved ones or an advisors practice to suggest that there is never a place in the world for Annuities. In fact, I would argue that in todays market, “Zero is your hero” may be what some of you can relate to, and if I told you that there are vehicles out there that DO NOT charge you a truck load of fees (fees are not bad, your advisor charges you fees) provides you Fixed income for life that can never go away, and allows your to earn interested when the market performs well, but when it is going backwards, you lose nothing, and maybe earn nothing.
I’d like to think this is something that may or may not be a fit for you, but it should never be suggested that Annuities are always bad, especially when they can contractually do things that no other investment vehicle out there can “contractually” guarantee, and no Human Advisor can assure you he/she can do for you without the help of an Annuity.
I just want to say, that Annuities are almost never the right fit for your entire portfolio. They are simply a tool that can be used to enhance your portfolio and give you the Income Security that you always wanted within your portfolio. I am also a huge fan of traditional investments within your portfolio – suggesting it is the right fit for you also. None of these strategies are inherently
bad, and none of them are inherently good. They need to be paired with the right investor, at the right time for the right reasons.
May we not be swayed from having our own curiosity and critical thinking because an investment advisor refuses to have an open mind. This can be a retirement Killer.
Blessings to all.
Your Turning 65 Advisor
Brent M Crawley.