Considering an annuity for your portfolio?

annuitiesAnnuities are complex investments. Here are 10 questions to ask to protect yourself.

Consider who is selling to you and how they are compensated

By Wendi Strom, The Denver Post

May 28, 2017

“Annuities can be complex and at times are aggressively sold. As a result, many buyers may sign on the dotted line before truly understanding what they are getting into. Since they also can come with hefty price tags and restrictions on withdrawals, knowledge is power. It’s important to arm yourself with the right questions to ask if you’re considering an annuity purchase.

With the help of the Colorado Department of Regulatory Agencies (which has an informational page on annuities at, I’ve created a list. Though it’s not exhaustive, it will give you a good start of things to consider and questions to ask any financial professional recommending an annuity purchase:

  • Who is selling this annuity to you, how did you find this person and what do you know about them?
  • What are the fees you’ll be paying?
  • If you decide you need some of this invested money back in the next couple years, how much can you get without paying an additional fee?
  • What are the risks?
  • What kind of protection, if any is provided to you in this product? And if so, how much are you paying for that protection?

…If used correctly, annuities can be a meaningful component to a broader financial plan. Though they are not the easiest investment to understand, they may fill an important void. You owe it to yourself to understand the features of the product, take the steps to identify if you truly need this in your financial picture, and more importantly be aware of the potential pitfalls so you can protect yourself today and in the years to come.”

Read the entire article about annuities

Wendi Strom is a certified financial planner at Lotus Financial Partners in Denver.  A lifelong champion for women’s financial security, she serves as the president of the Financial Planning Association of Colorado. 

Need investment advice for 2017?

investment advice

Economic concerns occur when a new President of the United States is elected. No one really knows for sure what is going to happen in the future, but if you are looking for some investment advice, then the following article may help you make decisions on your retirement investments this year.

Investment moves based on likely events this year

by Elliot Raphaelson, The Savings Game, Chicago Tribune

January 24, 2017

“Many readers have written asking for advice about how to invest for consistent income in 2017 with minimal risk. As I have emphasized many times, it’s impossible to reap high returns on your investments, whether it’s in the form of income or equity appreciation, without assuming some risk.

That being said, it is possible to predict likely occurrences in 2017 and make investments taking these into account.

What is likely?

It is likely that the Federal Reserve will increase short-term interest rates a few times in 2017. Most experts following the Fed agree. If that is the case, then bond markets will be volatile, and some long-term investments such as long-term Treasury bonds will likely decrease in value, even if only in the short term.

The “Rule of 100” investment strategy

Rule of 100

When I was in my late 20’s I started planning for my retirement.  I was not afraid of risk and so I purchased several mutual fund accounts focused mostly on foreign and domestic stocks.  When I retired from teaching at the age of 55 my investments were in a bit more conservative portfolio which included bonds.  I had followed the “Rule of 100,” which is a measure whereby you subtract your age from 100 to determine the approximate percentage your assets could be invested in stocks (more risk). The rest should be invested conservatively (less risk). For example, I am now 57 years old; 100 minus 57 is 43. So the Rule of 100 would suggest I have 57 percent invested in lower risk accounts (cash and bonds) and 43 percent could be placed in higher risk accounts (stocks). Therefore, the older you are the more conservative your portfolio should be since you don’t have time to make up any losses due to a downturn in the stock market.

This is my current asset allocation in my retirement investment portfolio at age 57:

  • 13%     Cash
  • 37%     Bonds
  • 28%     Large Cap Stock
  • 15%     Mid/Small Stock
  • 7%       International Stock

So, you can see I have 50% of my portfolio in cash and bonds (low risk) and 50% in stocks.  Pretty close to the Rule of 100 suggestion.  However, my online financial advisors at VOYA Financial suggest I put less in bonds (24%) and more in international stock (23%) since I have time to recoup any losses and current interest rates are low.  Their investment strategy does not follow the Rule of 100.  That Rule is no longer suggested due to low interest rates.  Read more about this and other common investment rules which no longer apply.

I may consider adding more international stock to my portfolio in the near future, making it a bit more risky, as our economy appears to be changing.  What is your current asset allocation?  Do you still follow the Rule of 100?


Inflation protection

inflation protection

Is inflation a risk to your retirement?

It is important to understand the risk that inflation may pose to your retirement income.

Fidelity Viewpoints, December 14, 2016

“For much of the last decade, inflation has been low by historical standards. But, recently, wage growth and higher prices have sent signs that inflation may be making a comeback, serving as a reminder of the risks that come when the buying power of a dollar falls. Such risks always exist, even when they don’t seem so obvious.

If you are a retiree or are planning your retirement, the effects of inflation can be pernicious. Inflation can eat away at spending power. That isn’t necessarily a problem. Some retirees actually see their spending decline as they get older. Still, retirees should at least be aware of the risks posed by inflation. When you are a retiree, you can no longer seek out higher wages to offset higher prices. You have to rely on the inflation protection of your pensions, Social Security, annuities, investments, or other income sources. Consider strategies to maximize these inflation-protection features; otherwise your ability to maintain your lifestyle may decline over time.

Some research suggests that people don’t understand the inflation protection provided by common retirement income sources. A survey from the Financial Literacy Center found that more than 40% of people did not understand how Social Security payments react to inflation—never mind pensions, annuities, or investments.”

Read more

Interest rate hikes affect bonds and other markets

What the Fed’s move may mean

The Fed raised rates, and expects the pace of hikes to pick up in 2017. What could it mean for bonds?

Fidelity Viewpoints, December 14, 2016

“For the second time in roughly a decade and the first time in a year, the Federal Reserve has voted to raise interest rates. Treasury bonds, which had already seen sharp losses since the election in November, saw yields climb in trading after the announcement.

While the rate change at the December meeting was widely anticipated by the market, the future path of rates, and what it may mean for bonds and other markets is less certain. Viewpoints caught up with Fidelity Government Income Fund Manager Bill Irving, to get his take on the December meeting, the path forward for the Fed, and what it may mean for investors.”  Read more

I think it is premature to call the end of the three-decade bull market for bonds.

interest rate

Three ways to make your money last in retirement

By Christine Benz and Jeremy Glaser | 07-29-2015 03:00 PM


Making money last in retirement

By Adam Zoll | 03-21-2015 09:00 AM


Note:  Not a live video as the host states.  It is a recorded version.

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