Today we're talking about the best long-term investment strategies. I recently had a guest on my podcast called Fun with Annuities. It comes out every Tuesday on all major podcast platforms, and I encourage you to check that out. Back to my recent guest, Terry Savage. She calls herself the money lady, one of the founding members of the Chicago Board of Exchange, and I mean, she is royalty when it comes to investment advice. On the podcast, she talked about long-term investment strategies and where stocks have historically done well. If you look at the S&P500 returns, historically, they've done very well. If you bought the S&P 500 index from a vanguard or the fidelity low-cost mutual fund, buy and hold long term, things work out.
Now I can say this; I'm not licensed to do that anymore. I only specialize in annuities, but I used to work for Dean Whitter, Payne Weber, Morgan Stanley, and UBS and managed large amounts of assets on that side of the table. I understand stocks and bonds, ETFs, and putting together a portfolio. That makes me different out here because most people selling annuities don't have the background and the pedigree working with investments and working for decades seeing markets go up and down. I think anything long-term is good from a buy-and-hold standpoint. We all have read those stories where the person bought the stock, and they just forgot about it, and it rose.
We live in markets now that are 24/7, 365. They're global, connected, and it's really in vogue to be a trader. We read about hedge funds, private offices, family offices, and all of these masters of the universe. It's intriguing. Everybody wants to maximize their portfolio. When I read about long-term investing for real estate, long-term investing for stocks, or long-term investing period, it's interesting that it's never about annuities. The ultimate long-term is your life expectancy, how long you're going to live. As long as your breathing is long-term, as long as your breathing is mortality credits, as long as your breathing is life expectancy, that's the longest term you have. When you're dead, you're dead. It is what it is.
You need to look at annuities of all types, and let's stop here because you already own one. It's called Social Security, the best inflation annuity on the planet. Suppose you're fortunate enough to get a pension, say if you work for the government or state or a company that provides the type of divine benefit plan, good for you. That's an annuity, a Lifetime Income stream annuity based on life expectancy. But you need to consider annuities as long-term investments, especially for Lifetime Income.
Four products solve for Lifetime Income when looking at the annuity category. Single Premium Immediate Annuities for income to start immediately. For income starting at a later date, that's Deferred Income Annuities and Income Riders attached to, say, a Fixed Index Annuity or Variable Annuity. Then you have Qualified Longevity Annuity Contracts, in which you use IRA assets, non-Roth IRA, and traditional IRA-type assets for future pension income needs. For all those products I mentioned, you can go and run quotes to show what a lump sum would pay out. If you need a thousand dollars a month, you can see how much it would take to create that payment. But those are long-term plays. I'm not sure I'd call annuities investments; they're contracts. Still, you're investing in the annuity company, transferring the risk to them to provide the Contractual Guarantee you're trying to solve. I have an acronym called PILL. P stands for Principal Protection, I stands for Income for Life, L stands for Legacy, and the other L stands for Long-Term Care, Confinement Care. In my opinion, if you don't need to solve one or more of those items in the PILL acronym, then you do not need an annuity.
I ask every person I'm on the phone with, and you can book a call here, view my schedule, and set a time that works for you. But I'm going to ask you two questions. "What do you want the money to contractually do?" and "When do you want those contractual guarantees to start?" From there, I'm going to determine if you need an annuity, and if you don't, great, I'll tell you that. If you do, which annuity type will solve that specific situation you're looking to accomplish.
Most people, at the time of creating this blog, are either trying to do two things. They're either trying to protect the principle like a CD, MYGA, or a Fixed Index Annuity for Principal Protection and normal CD- type returns. I say normal, not current rates, but migrant rates are pretty good. Or they're trying to solve for Lifetime Income. Lifetime Income is the monopoly that the annuity category has, period. It's the only product type on the planet that will provide income as long as you are breathing. There's no ROI until you die. That's not some fun acronym that will come up with that rhyme. It's the truth. I don't know what that return will be until you die. Until then, it's a pure transfer of risk, leading us back to the best long-term investment strategies available. If you're rational and honest, it has to be Lifetime Income Annuities, and they have to be in the same category as everything else because it's long-term.
Guess what? Just like everything else, it works in your favor long term. The older you are, the better deal you'll get because the annuity company is on the hook to pay. Understand this, and this is a misconception many people have. They'll say, "Well, I don't want to buy an annuity because when I die, the Lifetime Income money goes poof, and the annuity company keeps the money." No, no, no, no. You don't have to structure it that way. You can say to me when we schedule the call and say, "Hey, I want a Lifetime Income stream for me and the spouse, and the second one of us dies, I want whatever's in that account to go 100% to my list of beneficiaries on the policy. I do not want that annuity company to keep a penny under any circumstance. I want them on the hook to pay regardless of how long the spouse and I will live."
You can structure it that way. You can have your cake, and you need it under that scenario, meaning that you can give the annuity company that money to hold onto with you knowing they'll pay you back as long as you live. If you pass away, whatever money is left in that account goes to the beneficiaries. That's a long-term transfer of risk investment. Do you need everything in annuities? No, of course not. You need a properly allocated portfolio for your specific situation and risk tolerance. Remember that annuities are risk transfer products. You're transferring the risk to the annuity companies to solve primarily for Principal Protection and/or Lifetime Income. Then you have the legacy and the long-term care that you can also do.
Most people, with all these people returning 10,000 baby boomers hitting 65 every single day, it is a demographic tidal wave. People are looking for Lifetime Income because most people have defined contribution plans. 401ks, 403Bs, 457's, etc., that's accumulating. They have to turn some, part, or all of that into a Lifetime Income stream when they go to chapter two of their lives. Only a few companies offer defined benefit plans, which are pensions, except for the government, state government, excellent labor unions, etc., that's negotiated that. There's a handful, and less than 7% of companies at the time of creating this blog, offer those types of pensions and the gold watch. In the past, you used to work for the man the whole time. They gave you the gold watch, and they gave you the pension. It doesn't work like that anymore.
You have to hold your nose and say, "You know what? I might need to get that Lifetime Income stream annuity." Remember, an annuity is the only product that can provide a Lifetime Income pension. You got to look at it like this. Forget the word annuity. It's a personal pension for you. It's a Lifetime Income stream. It's retirement income insurance and it's Lifetime Income insurance. Do you have that? Do you have that now? Do you have enough of that? Who knows? With inflation coming, will you need to solve that inflation amount for your specific situation using a Lifetime Income annuity payment?
Just think about that for a second. I read all these stories about long-term investing, and smart people like Terry Savage will say, "Yes, long-term investing works," and her friend Warren Buffet. Yes, she's a friend of Warren Buffett. If you go to her site at terrysavage.com, you can watch her interview with her friend Warren Buffett, and they'll all talk about long-term investments. We're at the point now that it's time to start talking about Lifetime Income Annuities, Lifetime Income Insurance, Retirement Income Insurance, and using annuities as part of that long-term investment strategy for your specific situation. You don't want to run out of money, and you want to live the lifestyle you've worked hard to. You've earned it, you've checked the boxes, you've scrimped, you've saved, and you're now there. Put that income floor in place so you can go live that life you've always wanted.
Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.