Your Survival Guy

Preparing your investments and family for when disaster strikes.

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Your Retirement Life: Run from Shiny Happy People

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By Gajus @ Shutterstock.com

Let’s start with our bank of bad habits, shall we? The most common one I see is the annuity. How do they even get into a portfolio? I’ll tell you.

“Well,” a prospective client might say, “I had a cousin who told me about that one.” Or, “It was sold to me years ago by some guy. I don’t remember his name.” Or, “My employer brought in this company to give us a presentation.” You get the idea.

When investors are young and start making a little scratch, they don’t spend time researching investments. They’re too tired. They don’t have time. They trust who they’re talking with. Plus, the kids are hungry. Where’s the pinot gri?

When investors are older, they can’t afford to lose their life savings. They want income, and they want to spend time on more pressing matters like choosing between a Sig 226 or a Glock 19 (I like both). They don’t want to think about what could happen to their money if, say, cities start burning.

Annuities are sold by shiny happy people laughing, holding hands, walking the beach at sunrise or sipping chardonnay by the fire at sunset. They tell you: “We have all this, plus we get the highest daily value of the stock market every single year.” Then, there’s the small print or voice like the one you hear for the medication commercials trying to eat your eggs. “May cause upset stomach, internal bleeding, or…” You get the point.

When I think about annuities, I picture a guy in a white lab coat working in compliance, in charge of protecting the company with a prospectus, staring at the ad campaign on his computer and saying to himself, “Oh, boy, this might take a while.” Working in a Wuhan lab never looked so good.

Because you and I know, nothing is for free, someone needs to pay for the advertising. Someone needs to pay for the salesforce, never mind dealing with negative interest rates and the bonuses for the creeps on the trading desk—what a mess.

So, the next time you or someone you know starts talking about annuities, make sure you get a few things in writing. Real simple: What’s the annual fee, what’s the surrender fee, and what happens if the insurer goes bankrupt?

Then, you’ll have all the time in the world to find the right handgun and perhaps an advisor you can trust with your life savings.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com