Take Point on Retirement – May 15th 2021

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Speaker1:
The following paid program is prerecorded and sponsored by Take Point Wealth Management on the Nature Coast of Florida take point on retirement, a well rounded show from a well-rounded team leading you into retirement. Listen, Saturday mornings for an hour of simple retirement advice from your friends at take point to wealth management. Saturday mornings, seven thirty. And look at there it is, Saturday morning. And thanks for joining us for an hour long program called Take Point on Retirement. You just heard it from your friends at Take Point Wealth Management. And you're going to hear for the next hour right here only on this station and only at this time brought to you by my friends and yours as well. Take point, wealth management up and down the nature coast here to serve each and every one of us with their food fishery services. You can reach out to them in the meantime, at three five to six one six zero five one one. If you have any questions from what you hear today or if you have any questions at all, they'd love to take those questions at info at take point on retirement dotcom. You can email that question to them. They'll get back to you. So take point on retirement. Eric Arnet, lead advisor, retirement planner and certified public accountant. Randy Woodruff in the studios. Good morning.

Speaker2:
Good morning and welcome. Good morning, Bill. And good, great weather out there. Nature Coast is the place to be booming, too, right? I love it. It's going on in and roasting. I mean, cripes, the every realtor I talked to some of our clients there, 10, 15, 20 people waiting for a home. I read a national report that there's there's a four million home shortage for all that. Talk about the market update later. By the way, welcome. Take point on retirement warriors. We have a great show for you today. And we've been sharing a lot of types of tax free investing. And this week we're going to share two ways to replace bonds in your portfolio and how to generate greater return and avoid market risks associated with your bonds in the slightly rising interest rate environment. We want to have a market update. We're going to get our chief investment officer, Mark Dorio, on here to also talk about bond replacement strategies with fixed index annuity structured notes, dive more into what a structured note is and why we think it's a good opportunity in today's marketplace. So volatility the underlying forces behind it. Obviously, tons of stimulus jobs is actually a job for everybody in America right now. If they want to go back to work and

Speaker3:
Point right there, they want to get back to work.

Speaker2:
You know how I said that?

Speaker3:
As I'm listening, it's not as bad here in Florida, per say, restaurants, other service industries are having a hard time finding employees because as the stimulus money and the unemployment benefits are sort of getting, I'd rather stay home and collect free money and then go back to work. It's unfortunate that I mean, I understand the need to stimulate the economy, but we don't need overstimulation. Exactly. Yeah, it's called welfare.

Speaker2:
I mean, just doling out free money and, you know, getting people more accustomed to welfare and staying home and collecting a check. What they want is everybody to get used to that and then vote for it. And then, oh, the thing that they want to sneakin is that every American or if you qualify at a poverty level, we'll get a check for two thousand dollars a month for us your

Speaker3:
Life at the taxpayer's expense.

Speaker2:
How the hell are we going to pay for that? That's that's the scary thing. The debt clock just keeps going into the 30 trillions now. It's just out of control. And that's why we have so much concern for our retirement warriors. Who they going to come after for that? Those tax dollars,

Speaker3:
They're 60 trillion dollars. I think you said that is out there in the hands of baby boomers. The baby boomers have experienced probably the biggest wealth accumulation in the history of the world, you know, as a generation. And I think that as we're talking about debt paying back the debt, taxes going up, I think going forward we're going to see the biggest that generation or their wealth as it gets passed to their heirs is going to be the biggest, I'll say, wealth grab by the federal government that we've ever seen in history, pay for our spending.

Speaker2:
Absolutely. And keep in mind that 60 trillions in retirement accounts of the baby boomers. So at 72, you have to start taking money out. Well, they could raise those rates, raise your tax rates. Also, they eliminated the stretch, IRA. So what that means to you is that your beneficiaries can no longer defer that taking the money from the IRA. They're going have to take it within five years and pay all the tax on it at their tax rate, which if you've got a son or a daughter and they're making a decent living, they're in the 20, 30 percent tax bracket and all of a sudden they have to take your IRA. So you got a million dollar IRA. They got to take that over five years. What's that going to do now? Now, your hard earned money when you pass it on is going to be taxed at like let's just say I'm not saying specifically, but could be as high as 40 percent if they change the laws with who's in power right now, are they want to blindly raise taxes across the board? It could be 40, 50, 60 percent on the wealthy who inherited money.

Speaker3:
It's like, well, you didn't work for that. You should pay more for that kind of money.

Speaker2:
You know, that's why I want to talk about solutions for this problem that's facing our retirees. We call it retirement headwinds. We always talked in our seminars. And even when folks come into our office, you know, how can we reduce taxes? On your plan, how can we reduce fees and then how can we reduce risk

Speaker1:
So and how can we protect our investment?

Speaker2:
Absolutely, yeah. And that's why that's why we designed and put in place what we call the smart plan. Yeah. So the smart plan is tailored for you. You can call in. It's a fifteen hundred dollar value. Sit down with us. I don't care if it takes days, weeks, months will go through everything with you will devise a plan for you. You can go to take point on retirement dotcom. You can click on there for an appointment. You can call in three five to six one six zero five one one. Now, more than ever, folks don't go to sleep because the stock market has been pushing so much higher. And we're starting to get a lot of questions. Is the market overvalued? When do I sell? Typically, when we see the general public piling in and starting to want to invest all of a sudden because they're seeing a nice run in the market over the last six months, people are telling our great returns I've had and now everybody wants to pile in. It's called Fumo for fear of missing out. You're missing out becomes this emotion that people can't handle. So they stay overly aggressive or they put too much in equities. And if you're close to retirement or you're in retirement, we've really got to get that risk dialed down. But at the same time, be able to achieve your goals and put together a plan that's going to get the return that you need. We've talked about it endlessly on this, the four percent rule rule on hundred, all these types of things that need to be incorporated into your plan. But today, we're going to talk about how do we replace the bonds side of your portfolio? What are we doing to combat the potential increases in interest rates, which will cause a lot of pressure on bonds? So bonds are trading at like one hundred and thirty five times their earnings right now. So they're very overvalued, very expensive.

Speaker3:
What does that mean? One hundred and thirty five times earnings? It just does even sound possible.

Speaker2:
It's just that the value of the bond and the bond prices don't equate to the valuation of the company.

Speaker3:
The real value

Speaker2:
Is way overvalued because you think about it, we've been in a bond rally for the last ten years, twelve years as interest rates have come way down, those bond values of those existing bonds that were out there really increased in value. So had a huge bond rally. But the the largest and the most revered bond manager in the world ahead of PIMCO said that it's time to get out of bond. Mr. Bogle from Vanguard, he said two major corrections coming in the stock market and in the next five to ten years. So you've got to get your portfolio position, what we call the smart plan, where there's really two places you can invest your money. Smart risk, right? You've got to have some money at risk that's fighting inflation and some exposure to equities. But you have to have the majority of your portfolio in what we call smart safe, where you can get upside in the market, but your principles protected. And this offers an alternative to what bonds will normally do in your portfolio. And I know it's hard to explain, understand for most folks out there, but when you come in and sit down with us, we can show you through our charts and our educational process you'll gain an understanding that you never had before as to how bonds can really be dragging on your portfolio right now. That's why we're looking to fix indexed annuities. We're looking to structured notes. You know, we have structured notes that are paying 13 percent. These don't have interest rate risk. So these are the alternatives that we need to look at.

Speaker3:
Quick question for Eric. Come in here, talk about a major correction. So what does that mean in terms of drop in value? Is it a 10 percent, 20 percent, 30 percent drop in the markets?

Speaker2:
Yeah, 20 percent. 20 percent. Okay, 20 percent in major correction from a high. If your portfolio is positioned properly, you won't have to worry about that. Maybe you might see a five percent correction or two, two or three percent correction in your portfolio the way that we structure them. But if you're all equities and you're in a passive portfolio of just mutual funds or no one's really actively managing the dynamics of the portfolio, it's just kind of in a passive portfolio, you could get one hundred percent of those market losses. We find that the majority of people that come in have no idea what kind of risk is in their portfolio. And there's tons of risk in your portfolio. You have market risk, systematic risk, interest rate risk and a lot of risk that could really potentially hit your portfolio. So we can really dial that in with our smart plan. I'd love to be able to share that with you guys. Proprietary plan that we put in place. And once folks are in that, guess what? The phone doesn't ring. People are very at ease. It works, meets their goals, and they don't have to worry about the risk. It lowers their fees. And also, guess what? When you work with a CPA and we're on top of your taxes every day, we're constantly looking for tax strategies to alleviate that taxation. And that's why we've been so passionate about talking about certain strategies. Finally, folks, and in our book of business and even the prospects are getting really aggressive at moving to that Roth move into an AOL. We've got to develop that tax free bucket for your future thing.

Speaker3:
I thought about when it comes to converting to a Roth IRA, I think the way the government there, the actuarial table they have in place for. IRA distributions you. It has someone's life expectancy running out to 110, 150 or 18 years of age. So basically, when you start having to take an hour and a 72 years old requirement distribution, the table says you're going to suppose you lived one 18 years old when nobody really lives alone. Most you don't make it to 90. Basically, it's more important, in my opinion than ever to go ahead and get that Roth IRA done earlier in life, get that money into that Roth IRA, because as we would talk it on this show for months, taxpayers are going to go up. Easy place for the target is, hey, let's drop the the R&D calculation age from 118, then let's say 95. What that's going to do is that's going to accelerate a lot more of your IRA being pulled at between 72 and then the time you pass away that IRA converted to a Roth IRA, you won't be subject to that acceleration in tax.

Speaker2:
Yeah, absolutely. And if you're sitting there and you're in their 60s or early 60s and even if you're in your mid 60s, you live to be 85, you've got 20 years to get this position properly. You may want to get a position a lot sooner than later because of kind of what's going on with the current administration. We're going to come back, dive into Mr. Dario's second quarter market outlook. This is our chief investment officer with Buckstone Capital. Always offers a great, just simple and decisive kind of market overview. And I'd like to make some comments about it as well.

Speaker1:
When we return on Take Point on Retirement, a show brought to you every Saturday at this time from your friends and mine at Take Point Wealth Management, their phone number once again, three five to six one six zero five one one. Eric Arnet, lead advisor, retirement planner, certified public accountant. Randy Woodruff in the studio. It is a prerecorded program and sponsored by Take Point Wealth Management on the Nature Coast. Once again, you can check them out online. Take point a welcome. Just Google, take point wealth management. It'll take you to take point, I take it to take point. You can two three five to six one six zero five one. By the way, Eric mentioned that smart plan, which is a big point, a blueprint on your retirement. Fifteen hundred dollar value yours for the asking. If you call as our listener, you call them within this week or two and they'll set you up with that fifteen hundred dollars value free to listeners of take point on retirement three five to six one six zero five one one. Get it done now, folks, before it's too late. And we'll be back after this. Looking forward to that quarter to market outlook from Chief Investment Officer Mark Diorio at. Eric Arnet is an investment advisor, representative of Retirement Wealth Advisors LLC and SEC registered advisor, Pequeno Wealth Management.

Speaker1:
This station in RWA are not affiliated. Exposure to ideas and financial vehicles discussed. It should not be considered investment advice or recommendation to buy or sell any financial vehicle. Any comments regarding safe and secure investments in guaranteed income streams refer to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to claims paying ability of the issuing company and are not offered by retirement wealth advisors. And we're back folks. Take point on retirement brought to you by take point. Wealth management along the Nature Coast within our listening area. Make your appointment now with Take Point Wealth Management three five to six one six zero five one one. Get that fifteen hundred dollar value. That's that smart plan blueprint on retirement only from take point wealth management. Give Eric Arnet lead advisor retirement plan or a call three five to six one six zero five one one. A whole team of professionals in your corner to back you up and lead you to that stress free retirement that we've all dreamed of. And it becomes reality would take point. Wealth management three five to six one six zero five one one. Turning it back over to the professionals in the studio, Eric Arnett, Randy Woodruff.

Speaker2:
I love to play our market outlook for the second quarter Chief Investment Officer Mark Dorio. And then also he does a nice little piece on a market watch on Bonds. I think it's great educational tool for our listeners. So let's cut to that tape and then we can make some comments on it. Let's do

Speaker4:
It. Hi, this is Mark Diorio, chief investment officer. This is the twenty twenty one second quarter market outlook. The new stimulus package announced in March makes it an estimated five point two trillion dollars in U.S. fiscal response to the covid-19 pandemic. To put this in perspective, the pandemic driven recession had only one fourth of the loss in cumulative GDP of the global financial crisis. It has received more than four times the fiscal spending, this one in economic activity. U.S. fiscal spending, an absolute and relative terms has been larger than most other countries. With the support of massive spending, the U.S. is estimated to show its strongest contribution to global growth in twenty years. The market has reacted to the stimulus efforts with a heightened anticipation of higher inflation, interest rates moved higher in line with higher expected economic growth and inflation. As a reminder, bond prices decline when interest rates rise. So Treasuries had their worst quarter in 40 years. But to put this in perspective, really, the bond market is just reversing from the panic. Low yields from last year. The market has shifted from favoring growth to value stocks. These rotations occur rather abruptly and given large outperformance last year in the first quarter, values showed its best relative quarterly performance in 20 years. The valuation dispersion between stocks ended last year at its widest range in 20 years.

Speaker4:
So the market has moved in a manner to narrow that dispersion. While tech stocks led last year and some areas became extended in general, it was not nearly as dramatic as the late 1990s tech bubble or the public market saw tech stocks cool off. The private equity market continues to aggressively invest in tech. As we noted in the twenty twenty one market outlook at the beginning of the year, we could see many trends reverse and that's what's played out in the first quarter. The implication is that diversification for today's world takes a little more effort. The fundamental principles of diversification still apply. It's prudent to own a combination of assets in line with an investor's risk profile. From a practical perspective, while stocks get all the headlines, a portfolio that owns a combination of stocks and bonds reduces the time from peak to recovery, and at times that could be measured in years. Bonds are not all the same, and like stocks, they have a variety of different sectors that respond differently in different interest rate environments. So incorporating a more thoughtful bond strategy makes sense in today's environment. 20/20 saw the rise of thematic strategies or strategies that focus on opportunities such as disruptive innovation. These strategies allow investors to allocate to unique opportunities that are generally not represented in traditional portfolios.

Speaker2:
Boom. You're my witness to what we've been talking about for the last six months.

Speaker1:
I just heard it right there. Right. And I can't believe once again the aggressiveness in the technology stocks.

Speaker2:
It's not like I have a crystal ball or in our crystal ball. But we've been predicting this, yeah, for quite a while because we're so in tune with what we do. And and we always have the pulse on the markets and our clients portfolios right there. We've been talking about the importance of diversification. We've been talking about the rotation that's going to come out of growth and technology and the value stocks value is far outperforming growth right now. And you're seen a lot of money flow into value stocks that were beaten up by the market and not getting much attention. We've been talking about it for months. The broad market will rally and it has rallied in the broad market itself, will continue to probably rally. But this is why we stress more than ever you have to have an actively managed portfolio, because if you don't have someone actively managing that rotation for you owling down growth a little bit down down bonds and adding some value to your value stocks. You know, if you don't have someone actively managing, you're not well diversified, then this is where you're going to see extreme volatility in your portfolios and especially for our retirees. I mean, you just can't have that.

Speaker3:
So there's no reason people have to just sit back and expect that they're going to have to ride the markets. They don't have to ride the highs and the lows and be a part of that. If, like with active management, you can avoid the lows and still don't understand why people expect that they have to do that. They don't seek out active money managers because it's really going to have a long term impact that we've demonstrated in our seminars and on the show. Avoiding those lows is going to have huge impact on where you're at when you get in retirement, how much extra money you're going to have.

Speaker2:
Yeah, absolutely. More than ever, that smart plan, diversifying, diversifying your stocks, international value. You know, actively managing those allocations is so key and more than ever, like a rising tide floats all ships and people just don't know any better. Unfortunately, it's a lack of education and they've been sold something from somebody that that doesn't really know what they're doing either. Probably a rising tide floats all ships. Well, guess what? That rising tide is now at high tide. So now how do you negotiate the potential of the low tide coming? There's going to be rocks. There's going to be canals and and creeks and stuff that you got to monitor to get out of that. Also, Mark has a great recap and MarketWatch on Bonds. I'd love to play that real quick so we can comment as well, because the bond side of the portfolio is really what we want to dive into today and talk about in great detail.

Speaker5:
Hi, this is Mark Diorio, chief investment officer. This is MarketWatch. For the week of April 12, interest rates have been rising off their low yield from August of last year, which causes bond prices to decline. This move was rather sharp in the first quarter. Rates are well below where they were at their high end of the last ten years, which was in twenty thirteen so they could go higher. As economic growth heats up, putting short term pressure on bond prices, most bond portfolios are benchmarked to the. Aggregate bond index, but that index is currently showing its highest duration or risk of principal loss if yields move higher and showing its lowest yield in its 44 year history. On the bond side of our portfolios, we position portfolios to manage this challenge. In the select series, we use three actively managed strategies that combine for a positive return on the aggregate bond index was down more than three percent in the first quarter. In the Star series, we reduce duration around the aggregate bond index to reduce overall draw down. And in the Smart Beta series we built an investment grade bond ladder that reduced duration without reducing yield. In brief, bonds remain a cornerstone of diversified portfolios. Thoughtful bond portfolio management is critical to portfolios going forward.

Speaker2:
So your bond side of the equation also has to be actively managed to keep you just a passive investment. We talk about equities all the time and stocks and I guess that's the exciting part. But the bond portion of your portfolio, most people don't even know what kind of bonds they have in their portfolio. Right, because they've got mutual funds kind of hide those bonds and those allocations in there. I was with a client the other day and half our portfolio was in cash and half of our portfolio was in bond mutual funds because she was just scared, losing principal value and what's supposedly a safe environment. Typically, bonds are used to create income, but they can't right now because rates are so low, they do create a hedge. And that's what Mark's talking about there. The stock markets of the stock market were to pull back 10 percent and you had half your portfolio in bonds. You'd only be down about five percent. However, I think that there are some strong bond replacements, and I think having a bond replacement is a vital part of a balanced portfolio. Harry Markowitz was was credited with creating modern portfolio theory in 1952.

Speaker2:
So if you have a typical 60 40 bond portfolio, you're using an almost 70 year old investment strategy. Let me say that again, a 70 year old investment strategy. Also, let me stress, I wrote this down as I was listening to Mark's comment. The bond market has not been this rich or this overvalued in 44 years. That is telling us that's a signal we want to get out ahead of. If you have a typical 60 40 portfolio using almost a 70 year old investment strategy, I think there's a new 60 40 portfolio that replaces 40 percent in bonds with either a fixed indexed annuity or a five note structured note latter structure. No matter where we utilize those structured notes and we create a ladder of five of them, they have really great yields. We take the middleman out and Brookstone Capital is a market maker in this so structured notes. You need to get the white paper call in, understand? Come in, talk to us. We'll educate you a little bit more on structured notes. But they offer a great replacement and a great alternative to bonds right now.

Speaker3:
I think structured notes are I have heard about it until maybe I've heard about him over the last few years, but never really paid much attention to them until recently. And so I think most of our listening audience probably is unaware of them as well as they've heard about him on this show or a few other times. But I really would encourage everybody to come along and get that white paper and learn about them, because as you talked about on this show, again and again and again, educate yourself, educate. And you can go in and get this A.C. 360 book, because a lot of you probably were out there paralyzed by fear of the unknown, which is understandable. But you can break that paralysis by learning and educating yourself. And so please call us and highly recommend you get this white paper on this structure note. Yeah.

Speaker2:
If you don't want to call sheet, you can go to our website to take point on retirement dotcom or take point Wolf. Dotcom, either one.

Speaker3:
We'd really like you to come in the office and meet with us. That would be the ultimate.

Speaker2:
Yeah, well, that would be the best thing to do. But you can click right on there. There's a financial workbook button. You can hit that and put in your comments, your email phone number, and we'll get a hold. You will get a book out to you. Also get that white paper on structured notes, education, education, you know, so the word of the week is bond replacement folks. So when the bond market offers little income, what we're talking about now, low interest rates, you know, you just can't get a lot of income. Bond price swings start to resemble that of stocks. Mm hmm. It's a specifically, instead of trying to pull blood from the old stone of fixed income investing, look around for substitutions for what bonds used to provide for you. So and that's why we bring new innovative tools and active management to combat these kind of passive strategies that can get you in trouble. And like you said, just paralyzer, you don't know what to do. You can get market like gains without market risks, protect your hard earned assets, generate a consistent income for retirement, grow your money, tax deferred. And guess what? You eliminate the advisory fees that you're paying on the bond portion of your portfolio. So if you have a 60-40 portfolio and you're paying a one percent management fee, you're paying one percent on underperforming bond. Portfolio 40 valued at O'Reilly, so we eliminate that there's no fees on the structured notes or the indexed annuities, typically, depending on the ones that we prescribe for you right there, we're going to eliminate taxation or lower taxation. We're going to lower the fees and also lower the risk. What an amazing, smart plan. But you got to learn about it. You know, most people out there listening might be a little hard headed. They're used to the old conventional wisdom in the old conventional way of doing things. And I think we know from life experiences that what you were what was invented and was worked 70 years ago is probably not working now going forward. We're still not driving 70 year old cars. Cars are almost autonomous.

Speaker3:
Now, just think in the last 30 years, basically the Internet has been around for probably close to 30 years or something like that. And just think how much has changed in the last 30 years. Think about when you first get your first email account and when there's a dial up AOL account. You had that little squeaky noises. They were down and up. And now, I mean, if we don't have 4G or 5G, we're we're impatient and we don't like to wait. So to your point about change, it's definitely change is happening quicker and quicker all the time.

Speaker2:
The other day I showed an example of our smart plan on replacing the bonds. We also take these and project them out over 30 years, test them right in front of your eyes, do a stress test so you can see for yourself. But the difference on a million dollar portfolio was astonishing. Over that 30 year period, the fixed index annuity was two point eighty five million dollars, which is better than bonds over over 35 years. And 210 was saved in fees by replacing bonds with indexed annuities. Here we go.

Speaker4:
Fixed index annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial adviser talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. At my firm Active Wealth Management, we believe this is a smart way to protect your future. Many people have learned that bonds are a safe way to invest your money. But there are some downsides to bonds that should make you think twice. We'll talk about some reasons why you should consider replacing your bonds with annuities. First, here's some information on the history of bonds in the United States. Historical bond volatility. The 1900 saw two secular bear and bull markets in U.S. fixed income inflation peaked at the end of World War One and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The U.S. government kept bond yields artificially low until nineteen fifty one. The long term bond yields were at one point nine percent. In nineteen fifty one, they climbed to nearly 15 percent in 1981. In the 1970s, globalization had a huge impact on bond market. New asset classes such as inflation, protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created early. Investors in these new asset classes were compensated for taking on the challenge.

Speaker4:
The bond market was coming off its greatest bull market. Coming into the twenty first century long term bond yields declined from a high of fifteen percent to seven percent by the end of the century. The bull market in bonds showed continued strength in the early 21st century. But there is no guarantee with our current market volatility that this will hold see chart fifteen point one to see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history alone, you can see how uncertain the future bonds is. Inflation and fluctuating interest rates play a big role in bond yields. Interest rate risk of bonds, bonds and interest rates have an inverse relationship. When interest rates fall, bond prices rise. Due to the covid-19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option. However, this has caused bond yields to fall to all time lows as of May. Twenty four twenty twenty. The ten year Treasury note was yielding point six four percent and the 30 year Treasury bond was at one point to seven percent.

Speaker4:
Reinvestment risk of bonds. This is the likelihood that investments cash flows will earn less and a new security. For example, an investor buys a ten year one hundred thousand dollar Treasury note with an interest rate of six percent. They expect it to earn six thousand dollars a year. At the end of the term, interest rates are four percent. If the investor buys another 10 year note, they will earn four thousand instead of six thousand annually. Consider the possibility that interest rates change over time when deciding to invest in bonds systematic market risk. This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpaired. And it is impossible to avoid diversification, cannot fix this issue, but the correct asset allocation strategy can make a big difference unsystematic market risk. This type of risk is unique to a specific company or industry similar to systematic market risk. It is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes coming to the industry. However, there is no way they can know how those changes will affect the market. There are two factors that contribute to company specific risk business risk. There are two types of risk internal and external.

Speaker4:
Internal refers to operational efficiency and external would be similar to the FDA banning a specific drug that the company sells financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading reduced advisory fees. Investors who trade individual stocks may know how much commission they are paying their broker, but individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds they sell called markups, but they bundle them into the price that is quoted to the investors. This means you are unaware of how much commission you were actually paying. Standard and Poor's estimates of bond markups is zero point eight five percent of the value for corporate bonds and one point two one percent for municipal bonds. However, markups can be as high as five percent, up to fifty dollars per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time. Unlike an annuity which provides income for life. You must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss. As we discussed above, annuities will provide you with an income you can never outlive.

Speaker1:
A purchaser should evaluate and understand all the risk and cost of an investment in structured notes prior to making any investment decision, a purchase of a structure note entails other risks not associated with an investment in conventional bank deposits. A purchaser may not have a right to withdraw his or her investment prior to maturity or could incur substantial penalties for an early withdrawal if permitted. A purchaser should carefully read the disclosure statement and any other disclosure documents for a structured note before investing. Let's take a pause for station identification. You're listening to 1999, Filmworks, Jabe, Homosassa, and we're smack dab in the middle of Take Point on retirement, a show brought to you by Point Wealth Management every single Saturday at this time and only on this station. A little something for you to think about and a reason to get that Annuity 360 book from your friends at Take Point Wealth Management three five to six one six zero five one one. We'll be back after this. Take point on retirement, a well-rounded show from a well-rounded team leading you into retirement. Listen, Saturday mornings for an hour of simple retirement advice from your friends at take point to wealth management. Saturday mornings, seven 30, an investment instructor notes, is not FDIC insured, is not subject to credit risk. The actual or perceived credit worthiness of the note issuer may affect the market value of structured notes. Structured notes will not be listed on any securities exchange.

Speaker1:
Even if there are a secondary market. It may not provide enough liquidity to allow purchasers to trade or sell structured notes. As a holder of structured notes, purchasers will not have voting rights or rights to receive cash dividends or other distributions or other rights in the underlying assets or components of the underlying assets. Certain building costs are likely to adversely affect the value of structured notes prior to maturity. The price, if any, at which the notes can be purchased in secondary market transactions, if at all, will likely be lower than the original issue. Price in any sale prior to the maturity date could result in substantial loss structure. Notes are not designed to be short term trading instruments. Purchasers should be willing to hold any notes to maturity. The tax consequences of structured notes may be uncertain. Purchasers should contact and consult their tax advisor regarding the U.S. federal income tax consequences of the investment in structured notes. If a structured note is callable at the option of the insurer issuer, any structure note is called the holder will receive only the applicable redemption amount. They will not receive any coupon payment that would have been payable for the remainder of the term of the structured note. Structured notes are not FDIC insured, may lose principal value and are not being guaranteed. Well, look, there we are back with Take Point on retirement, a show brought to you by take point wealth management up and down the Nature Coast.

Speaker1:
They're here to serve you and they're here for you, just like they were here for me. I take you to take point you can to judiciary service on the Nature Coast within our listening area. Eric Arnet, lead advisor, retirement planner, certified public accountant, Randy Woodruff in the studios with his each and every week. Plus, they have a full full, I'm telling you, a full panel of professionals that can assist you in any way you need. All you got to do is ask give him a call at three five to six one six zero five one one. That's three five to six one six zero five one one. All of our listeners today, if you give them a call this week, they will set you up with that blueprint on retirement, a fifteen hundred dollar value, their smart plan to get you going and they'll take over from there because they are take point wealth management up and down the nature coast here with free advice, financial analysis, consultations, evaluations, take point wealth management and a fine field of friends to help you. Well rounded legal professionals ready standing by to assist you, including Randy Woodruff, certified public accountant with Take Point Wealth Management. Erik Arnett, lead advisor, retirement planner, busy with clients. Randy, the mike is your works.

Speaker3:
Well, good morning, J.W.. Good morning. Eric's been working really hard and we had a lot of activity first of the year, especially with it being season. Yeah. People coming in and making some adjustments to their investments and first of the year resolutions and just new goals and plans. And he's really been busy the first quarter of the year, so and so it's good to be stress free every now and again, even when you're not retired yet

Speaker1:
Because your financial future is secure. You have no stress, no worry.

Speaker3:
If you know the future's bright, you can you can rest easy. So we have a lot of friends and and colleagues and other professionals in the industry that Eric and I reach out to to help our clients achieve that stress free retirement and talk about some of the things they do and they are and services they offer. And just to kind of remind people that there's a lot to do when you get ready for retirement or even just going through life in general. It's not just a living in a vacuum. There's lots of things that you need to be considering and there's lots of options out there that can that you can take advantage of for situations that may arise in your life. I had a client the other day and we were talking and put all his properties and I was got several rentals. We got all was properties in and in a couple of different places. And he has some hearing now that I need to trust. I'm like, yes, you need a revokable living trust because the asset protection that we did for the LLC, he's peppering those guys at the D the purchase properties in in in a couple different LLC to provide some asset protection was great. But that's just a portion of someone's overall say planning that they need to be doing. Certain individuals need more planning than others based on activities they're involved in. But so now we're working with this gentleman to get him or him and his wife a revokable trust set up. So they do eventually pass away. One day their state will be easily transitioned to their surviving children.

Speaker3:
Yes, we're working on that next year. I want to start out with real estate. That seems to be one of the hot topics on everybody's mind right now. If you're trying to you're trying to buy a house, you realize how hard it is. I mean, we're hearing constantly where people are are putting a house on the market. Even the House is on the market at above what might be the appraised value. And they're still getting multiple offers, multiple cash offers. We're seeing a little bit of that happen right now. Really? Yeah. If you've been around the well issues, the Nature Coast area as a top and a talking point, you know, rents have steadily increased over the last five years. And, you know, coming out of the Great Recession, you know, there was a lot of excess property in the market. That property got snapped up by investors and or people that were looking to buy a buy a new home. Values have gone up, as have rents. So, you know, a person that is on a fixed income and their income hasn't kept up with offsetting inflation and or and the rising interest and the rising rental rates. And that person could find themselves out of a home talking about mortgage rates going up. You have a mortgage that's not locked in a mortgage, that your rate is not fixed. I would definitely get with us. We've got a mortgage originators that we can put you in contact with. We need to take a look at your mortgage and see if it's the best mortgage suit your needs.

Speaker3:
Right now, mortgage rates are at or near historic lows. And so now would be the time I talked to my friends that are in the mortgage business are businesses. I mean, they're just they're so busy not just with resales or new purchases, but refinancing is really driving a lot of the volume right now because rates are at historic lows still there. They still there. And so if you if you have a if you're worried about if you have an interest rate that's not locked in, you should definitely let us take a look at helping you get that refinanced. Let's lock in those historic low rates right now so you don't you can here again feel less stress about your future. Now, your insurance may go up, your property taxes may go up on a minimal basis. If your home if you have homestead on your property, on your residential, your for your primary residence, you get homestead on it. Your your tax value should go up very, very small every year. You get commercial property or other. Property than you will see your taxes will move with the market in terms of the real estate market, that the prices and values continue to climb. Yeah, they're going to constantly be reassessing values in the area. And you're going to you're going to see those real estate taxes go up. And if you're a tenant in a commercial building, unless you got some kind of a lease worked out with a landlord for a long term fixed in rate with gradual escalators, if you have a triple net lease or where your landlord can pass on the taxes to you as the tenant, you may see some increases in rent also going forward.

Speaker3:
So we may see some increases in insurance to you and you just never know. That's that's all based on risk and all that. Good thing. We haven't had any I guess I say we haven't. We had some here in the Nature Coast. Our last hurricane was Irma that came through here and it wasn't well, it was unpleasant. It wasn't as bad as it was for other folks in certain parts of the state. Back to the real estate market, if you are trying to buy a house, you definitely want to make sure you're pre-approved. That's that's a given. I mean, if you're trying to buy a house, don't even bother trying unless you've already been pre-approved for your mortgage because there's so much competition out there for a house. Yeah, we're telling our sellers that they're as they're evaluating offers depending on the offers that come in. But almost all of them get so many offers that anybody that doesn't come in, this prequalified anybody that comes in with any kind of financing contingencies. It's almost the highest and best. And lots of times it's cash. I had somebody that was telling me that they had a client selling a house, that I could get the house prices to say it was too tight to ninety five by the time they got all the offers came in. All the give us your best offer process went through.

Speaker3:
It's sold for close to three hundred fifty thousand dollars cash out. Yeah. So there's that much competition out there for housing. So if you're buying again make sure you're pre-approved and make sure you almost plan on having to go above the listing price because that's what Spike was going to take to buy the house. If you sell your home, even more importantly, you want to make sure that you have a place to go. And so just like it's and it's not just this this real estate hype that's happening here in Florida is happening other parts of the country as well. So you want to make sure you know the market that you're moving into and that you have a place to go, because if you don't have that planned out ahead of time, you may find yourself out on the street once you sell your home, because it is, you know, in other parts of the country like Florida, housing is in high demand. Eric sent me an article last week that I think is from The Wall Street Journal. There's an estimated four million homes that are there's there's a lack of supply of homes to the tune of four million homes in America. That's a lot of homes. Four million homes is. Here again, if you're if you're if you're a thief, you're selling your home, you plan on moving somewhere. Make sure you got something secured before you actually put your home up for sale and execute a sales contract because you may find yourself without a place to go once you sell your house.

Speaker1:
All right. Two quick questions on the preapproval qualification. That's only good for so many days, right?

Speaker3:
I think it's good for 30 days. I think that the timeline, the

Speaker1:
Time, it just. Right.

Speaker3:
Yes. Yeah, yeah. And check with your lender or whoever you're getting your loan through, they'll be able to give you the guidance on that. But you definitely hear again, if I was working with a client selling their home, if I did see a preapproval letter that was dated, I would say more than 30 days, I would I would definitely discount that offer. In terms of what we're looking at, we present all the offers to my client. But I would definitely be, you know, concerned that that offer may no longer be valid or that preapproval letter no longer be valid. So if you're if you're looking for a home, I don't have a full cash offer. Definitely get pre-approved and definitely make sure you keep that constantly updated. Mortgage companies are different. You know, typically, if you're refinancing with the with your current lender, inspectors and surveyors are to services that are in high demand right now. If you are looking to refinance, be prepared to say wait some degree, because there's only so many of those specialists to go around in those fields and other fields that aren't even getting getting homes closed isn't in terms of title companies. It's that's not easy to hold up. I mean, sometimes it's the getting the title insurance underwritten and that's not thought of the local folks that usually they're the companies that that write the insurance, the insurance company. But again, some of these some of these services are I want to say they're holding up deals intentionally, but they're just there's too much work to do right now.

Speaker1:
Well, that's great information and education from the professionals that are in the studio today. That's why we call them in on a regular basis every week. By the way, every Saturday, seven thirty to eight thirty take point wealth management in the studio with us, a prerecorded program called Take Point on retirement. We address the issues, anything and everything to do with your retirement, your financial future, your stress free future. We address it right here on this program every Saturday, once again brought to you by your fine friends in mind at stake point wealth management. By the way, the number to call them is five to six one six zero five one one nine three five to six one six zero five one one. Maybe recognize that area code. That's because it's a local one and you should recognize it. That's right. They are a local fiduciary service with a slew of professionals ready to take action for you and to take point on your stress free financial future. With everything from A to Z, all you got to do is ask three five to six one six zero five one one take point wealth management. Eric Arnet, lead advisor, retirement planner, and Randy Woodruff in the studio with us this morning, certified public accountant, part of that take point wealth management

Speaker3:
Team, like we talked on the show about annuities way back in the day. Annuities kind of had some bad actors in the industry that take advantage of people's lack of knowledge, maybe maybe their situation, and maybe put them in products that were not suitable for their needs. And the same thing was done with with folks with reverse mortgages. Well, that industry, as I say, has grown up. It's got a lot more compliance around it. And more was one of the ones that was always writing good business and still does. But the reverse mortgage is a way where somebody can we've see this happen sometimes, Eric and I do. We have somebody come in and a lot of their equity is tied up or wealth is tied up in their house is the house they've lived in for 30, 40, 50 years. And it's grown in value. It's paid off and they don't want to leave their house and their last few years they have here on Earth. And so they want to find a way to keep the house, but at the same time still have some retirement income, be able to enjoy themselves.

Speaker3:
So reverse mortgages is a great way to be able to do that. So basically how reverse mortgage works is the reverse mortgage company basically begins giving you a monthly check, if you will, almost like an annuity payment or a pension. It becomes like another pension, if you will. And so every month you get a check from the reverse mortgage company based on the value of your home and based on your life expectancy. You know, so and then at the end of the reverse mortgage, they don't just come in and take your home. The home becomes part of your state and your heirs can sell the estate off, pay off the first mortgage, and they get to keep the balance. So this has to be a very attractive cash flow features for seniors who may not have the flexibility with their other income streams or have enough income streams to be able to meet their retirement goals. So so we have recommended a couple of different occasions that people use these reverse mortgages and and have had good results with them.

Speaker1:
Wow. Sounds like some great changes there because it has gotten a black eye over the years and a bad reputation. But reverse mortgages are not what they used to be. And there's a lot of changes there. Good changes for our senior citizens and those that are retired that need that cash. One of the great information once again in education by certified public accountant Randy Woodruff would take point wealth management.

Speaker3:
Yes, I remind everybody that in addition to being a certified public accountant, I'm also a realtor and I've got a team of professionals that I work with, a Berkshire Hathaway, two team partners in Suncoast team, Rob Rodriguez, Anthony Canary's both highly skilled professionals. And we're and there are both duly licensed real estate appraiser, mortgage originator. Let's transition on to estate planning and trust planning. We had attorneys that I work with here in the Nature Coast. Both do a great job. We as CPA, we're working with our clients, I say in the 90s, early 2000s to help them avoid estate taxes and we still do that. But the IRS, starting in 97, 98, started raising the estate, say limits. And by that I mean basically what your estate value could be when you passed away and paid no estate tax for years. It was six hundred thousand dollars. And then around 97, 98, they began raising it to where? In twenty twenty one it's 11 million seven hundred thousand dollars. So basically in the course of 13, 14 years, it went from 600000 to 11 million seven hundred thousand. Wow. That's a huge increase. So so you can see where six hundred thousand dollars know. And if you structure everything properly, you and your wife can both have that value. Six hundred thousand dollars each year, one point two million for a married couple. And if you're under that, you paid no state tax. If you're with that, you begin to start paying estate tax.

Speaker3:
When now it's eleven point seven million dollars here. Again, you can double that combined, if you will. Now it's over 23 million dollars. So I think we all know somebody in our circle of friends that probably has between husband, wife, couple, are worth a million to a million three, but may maybe not so that we have a say in our circle that's worth twenty three plus million dollars as a couple. So, you know, for us you're going to CPAs are planning has went from mostly usually we're really worried about people paying estate taxes. Now we're basically trying to help them transition their estate in a very efficient way, both for time and cost to their surviving beneficiaries, children or other family members. And so so estate planning for us as a profession being CPAs has evolved more into trust planning, if you will, and that setting up structures to avoid probate. One of the subjects that came up was Lady Bird. Yes. And that's something that hasn't been around forever. It's been around, I'm a guess, around 15, 20 years. And I think for certain people based on their there, I'll say they're a state level. A lady bird can be a very efficient way to transfer property of death and allow that person to retain control of that property while they're still alive. And and this is a big important and and get the step up in basis when when that person passes away like any planning, when it comes to estate planning, a trust planning, you know, the more complicated your estate is, the more costly it is and the less less complicated is the least costly it could be.

Speaker3:
And here again, people that are on in lower incomes, lower estate values, are looking to for ways that they can still retain control, transfer their assets to their beneficiaries in a very cost efficient manner and get them to step up in basis. And a lady bird does that. So for our our listeners out there who are worried about giving up control, Lady Bird can be it can effectively do that. One of the things I see seniors do and as they get get closer and closer to passing away is they they they start putting everything in their kids' names up, put their checking account, their kids names, their securities account, their kids names are home and the kids names and and in that way, it's it's already it's a joint ownership. And so when that parent dies or five member passes away, it's easy for the person. They can't just take over that asset and and properly dispose of it or sell it and split the other, split the proceeds with the other beneficiaries, whatever the arrangement was. But, you know, there can be some pitfalls to doing that, as I mentioned earlier, step up in basis. So, for instance, I'll give you an example.

Speaker3:
So let's say someone buys a house. I say they moved here to Florida in nineteen ninety five and they bought a home for, let's say, two hundred and twenty five thousand dollars. And they made some improvements to the home over the year for that to the home now. Twenty five, twenty six years and they're getting close to passing away. Let's say the home was worth now four hundred and fifty thousand dollars. I say it's doubled in value. Let's just say as an example. Well the home, the basis in the home was two twenty five, let's say the person willing to put another twenty five thousand into it improvements and now it's worth now another basis is two fifty. If they retain control of that home and don't transfer any ownership than anybody else when they pass away their beneficiaries, their basis becomes four fifty, which is the fair market value on the date of death of the person that owned the home or the decedent. So if they start putting people on the deed prior to death, now they've gifted part of their home. And when you. Gift, when you mean you make a gift, you gift your basis as well. So here again, it's very important when you're you're doing your estate planning to make sure that you structure things that, again, work to maintain your control while while you're still alive, I give you the income that you need, but also effectively pass your assets on to your beneficiaries in a very tax efficient manner.

Speaker3:
And here again, a lady bird dog is one of the ways that can be done on someone's primary residence. They have a more complicated and if you have cash, if you have checking accounts and things like that, there's no risk as the risk of basis with with cash. Cash, cash is a buck. A dollar in cash is worth a dollar or so. But if you have security accounts that say you have a account or saved account with Eric and I or an accountant, another financial services adviser, you know, if you have held those securities for a while, you know, your fair market value of the account may be significantly more than what you actually paid for those securities. So here again, on a securities account like real estate, you don't want to put somebody else's name on there prior to you passing away because now you transferred your basis to that person as well. So that's where trusts come in to play so often. And so we as I mentioned earlier, we've been we have CPAs have been transitioning out of estate planning. I guess there's still estate planning. The proper passing of someone's estate still is estate planning. But but definitely encouraging everybody to even though they're not worried about paying estate taxes, be worried about probate cost and also just how easy it is if you have a trust to settle your estate.

Speaker1:
Yeah, and that's the key word there. Trust. And that's why they call it a trust. Yes. Yeah, very

Speaker3:
Good. And so the the trust can be there's a lot of almost as what you put in the trust, whatever you can imagine, you can pretty much go in there. So if you want to if you want to really make sure you have some very specific directives for your trustee and for the how your assets are distributed upon your death, all those things, they can all be incorporated into that. I want to stress and I see it happen so often is is that make sure that if you're, you know, thinking about how you can settle your estate plans and you're starting to get into that estate planning and sit down with a professional that understands estate planning and then specializes in this area kind of incumbency, Eric and I, we can we can work with you through that process. And we can also recommend some professionals in the area that can help us draft the proper documents to make sure that your wishes are carried out both while you're alive. Then once you pass and then that's very important. But here again, I want to stress again the step up in basis. I see it happen way too often where people potentially Audu lose that step up in basis because they just take the shortcut and just start adding people to accounts or to deeds. And that's and that's not bad. Anyway, the most tax efficient way to do that. Estate planning, trust planning isn't just for the wealthy. Even people with the smaller values under a million definitely still have a lot to plan for. You know, don't don't don't think that trust their estate planning is just for the ultra wealthy. All of us have a legacy. All of us have assets. We want to make sure we get properly distributed to our heirs. And last thing we want to do is leave that to chance for someone else to make those decisions for us. And trust and proper estate planning will make sure that your wishes get carried out properly.

Speaker1:
So we're going to be back next week or take point on retirement every Saturday at this time, a whole hour chock full of the information you deserve and need for that stress free retirement. In the meantime, any last words?

Speaker2:
Just really hope folks give us a call and get in here and let's get to work. We had some this shows also, by the way, if you missed the show or you want to replay some things, you want to go back, you can go to our website, everything's podcast. And we and you can see up on the right hand corner podcast and click on that and you'll get the recording of the show if you want and give us a call. Let's go over some of these topics, what they mean to you, and let's get your smart plan in place and your conversion. A lot are in place today. Procrastination is not the best. Right. And also, you know what we've talked about before. No plan has a plan to fail. So let's get a plan in place and let's kick some butt.

Speaker1:
There you go. Failure to plan is a plan to fail. I'm glad you reminded me of that. You have to remind yourself each and every day, folks, as you make those plans, do not fail, but succeed would take point. Wealth management, they're taking point on your stress free financial future. Take point on retirement brought to you by take point wealth management every Saturday at this time. Seven thirty eight thirty one full hour. The phone number to call, by the way, three five to six one six zero five one one three five to six one six zero five one one up and down in Nature Coast of Florida, right here within our listening area, they have offices to serve you. You could go to them. They'll come to you. Whatever the case may be, it's so important to be active now, all you retirement warriors, and take that first step by contacting take point wealth management three five to six one six zero five one one in the meantime. I always say they have the whole corral of professionals that they can refer to or recommend, but the first step is to contact Take Point wealth management team and our studio this morning. So three five to six one six zero five one one is the phone number or check them out online. Take point wealth dotcom. I did. You can, too.

Speaker1:
And there you go. That's why we trust the professionals and that's why we call on them to come in the studio every week to bring you the information that you deserve, the information that you need, the education that you expect from our family and friends that take point. Wealth management, your friends do just give them a call, see how friendly they are. Take point. Wealth Management three five to six one six zero five one one J.W. here with you and you've heard me before say it. I go to take point and they take care of my financial future. A stress free future, by the way, you two can have the same results. Just reach out to take point. Wealth management, they're there for you up and down. The nature goes when that our listening area, well, can't say it enough to point wealth management. The folks you need to see up and down the nature coast. Tell them you heard it here on this station every Saturday, seven thirty to eight thirty. The professionals are in the studio to address those concerns about your financial future. That's right. If you hurry services and so much more. Eric Arnet, lead advisor, retirement plan or not, in the studio this morning. But we do have a certified public accountant. Randy Woodruff also dabbles in real estate and other things as part of that take point wealth management team, corale of professionals here to assist you into your stress free financial future, just like they did myself.

Speaker1:
That's right. J.W. does go to take point wealth management. And I'm looking at my stress free retirement. Well, financial analysis, evaluations, they're all right. They're free. A fifteen hundred dollar value. It's the take point on retirement blueprint for your retirement. Just ask for it. A fifteen hundred dollar value yours free if you tell him you heard it here on this station, three five to six one six zero five one one three five to six one six zero five one one. Take advantage of it now. Plus, what is your financial speed? That's a book that Eric Barnett wrote and he wants to send it to you along with other vital information like dos and don'ts of annuities, annuities, 360. So much more stress free retirement. That's all right there at Take Point Wealth Management. Check them out online or give me a call, three five to six one six zero five one one. We will see you next week right here. Same place, same time. Take point on retirement, a well rounded show from a well-rounded team of experts leading you into retirement. Listen, Saturday mornings for an hour of simple retirement advice from your friends at take point to wealth management, Saturday mornings, seven 30.

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