Jim Lorenzen, CFP®, AIF®
Sound familiar? If so, it’s because you saw all those television commercials selling safety to a frightened public. After all, all those daily market gyrations are scary to an aging boomer population who’ve spent most of their adult lives getting their financial education from television gurus, talking heads, and financial (entertainment) magazines.
When in doubt, hide. Buy gold, buy silver, buy guarantees! Maybe all risk will go away. Maybe. Maybe not.
Being conservative when inflation and interest rates have nowhere to go but up is probably a smart idea. The question is, where does conservative leave off and ignorance take over?
What are those commercials really selling? Equity-indexed annuities (EIAs). Without getting to far into the weeds, EIAs are basically insurance company IOUs. Your money is not invested in the stock market. It’s loaned to an insurance company. The insurance company puts the money in its general account and invests in a conservative portfolio, made-up mostly of bonds.
How do they tie returns to the stock market when the company has invested in bonds? You can get my 3-1/2 page report here!
Jim
