Mauldin does not speak of annuities specifically in his letters, but after reading his compelling analysis, we’re reminded that now more than ever we need to focus on the right combination of SAFETY, FLEXIBILITY, and PROFITABILITY.

With rates low, FLEXIBILITY becomes of paramount importance, as does SAFETY.  PROFITABILITY may need to be sacrificed for the near term.

If you are approaching retirement, you cannot afford to take unnecessary risks.  Doubling down on the stock market to try and recoup losses from ’08 and ’09, is a recipe for disaster.  Take a deep breath, think about the risks, and you may decide it’s better to be safe than sorry- better to have a retirement, even if it’s not as lucrative as you thought, than to risk it all and never be able to retire.

If your pendulum swings to Safety and guarantees, please Contact Us to discuss annuity alternatives.

If your pendulum swings to Flexibility, please consider laddering or balancing your CD’s in multiple FDIC insured accounts, and stay in touch with us for a more opportune moment to enter into an annuity.

And if your pendulum swings to Profitability… Well, please be careful.

What is so refreshing is that Mauldin is an incurable optimist- we share the view that the USA will continue to be the dominant player in the world economy and that our way of life is second to none.  Technology, energy, and creativity are at the root of the American people, and we will emerge stronger in the future.

A great Wall St Journal editorial from the last week of August, ‘10, which I can’t link to as it’s subscriber only content, detailed  how the dominant companies in terms of stock market capitalization did not exist 15 years ago.  What is certain is that American dynamism and ingenuity will create new opportunities, new profits, and new companies  in the years ahead too.  We will muddle through.

Well, it accurately summarizes our sideways marketplace and ‘muddle-through’ economy.

Reading this recent article, it’s easy to get confused. But what’s going on is this- the economy is slightly more stable, and the sales of annuities by banks is up to $2.8B in June of 2010, which is better than the $2.2B sales in January of 2010, when there was even more trepidation in the marketplace and investors were not making any moves.

That said, the June ’10 annuity sales numbers are sharply lower than the June ’09 levels of $3.6 Billion. Why the fall-off?
The answer is Interest rates. Yields on fixed annuity products are at disappointingly low levels in recent months. These fantastic products are unfortunately not really compelling or competitive right now due to the overall low rate environment. Plus, as the economy seems to be stabilizing ** (be wary of this, however) people may be creeping back into markets and not racing for the safety and security that fixed annuities can offer.

What do you think about these annuity sales trends?

This is a challenging marketplace for any investor, and the term “Muddle Through Economy” is quite appropriate.  The term comes from an analyst we greatly respect here at www.AnnuityStraightTalk.com, and would like to tell you more about him here.

There are very few people you can trust with your retirement savings when considering annuities, and it only makes sense to learn a few things first.  Certainly, don’t trust annuity sales people.

Be critical of financial products, and learn to trust yourself. By educating yourself, you can make the best decisions for YOU- and you can learn how to screen all the other competing interests. Only then will you be a Smart Buyer and be ready to make an informed decision.

“Trust, but Verify” is great mantra for any confident person, and we give you the tools to Verify what you read and hear about Annuities.  Annuities, and the advisors who recommend them, must Verify against your knowledge and tools. Only then do these people and products earn your Trust.
Become a Smart Buyer- Empower yourself to Verify before you Trust.

So how do you do that?  It’s pretty easy.

Step #1 is to sign up for our Free Guaranteed Lifetime Withdrawal Benefit report. This free report is available to help you understand these popular products, and you may be surprised to learn some of their pitfalls. Simply fill in your name and email and we’ll send it to you right away.

Step #2 is to become a member of Annuity Straight Talk- membership is free and The Annuity Report is available to our members. This report outlines in detail the decision process and critical factors necessary in buying an Annuity.

Step #3 is a strategy session, available to our members Here . These simple questions help us see if an Annuity is right for you, and help us to design an Annuity solution for your needs.

When you have the tools to make an informed decision, allow us to recommend annuities that meet your specific needs. You will find our recommended products and companies come with the best combination of Safety, Flexibility, and Profitability for your situation.

If you look hard enough at the best search engines on the web or in the classified pages of newspapers, you will find investment offerings like tax liens and private real estate investment note offerings yielding 8% to 12% or sometimes more.

Please, send away for a prospectus.  The reading is revealing and interesting- generally you will see that you, the investor, retain ALL risk associated with the offerings.  The companies, many with no credit rating and no track record, simply promise to pay… with no guarantee, personal recourse, history, or track record to back it up!

So much for safety!

Go to the opposite extreme for true safety, and you are stuck with government notes.  As of this writing, they yield less than 0% due to market turmoil.  But even when prices are normalized, T-Bills are in the 2-3% range.  Investors worldwide are therefore willing to lose money over the short term and give it to the US government to use, rather than invest in any other instrument.  Likewise, certificates of deposits are low yield, and after the bank failures, these hardly seem like low risk.

So much for Yield!

High-yields go out the window for safety, and safety is illusory!

So, what to do….

Investors in a cash position should congratulate themselves for being prudent and safe. But you know your need to step out into the market again soon.  Many need to place cash in a high yield safe investment that avoids the volatility of the current markets. Is this an oxymoron?

How about an investment with the safety of a CD, but the yield of a mutual fund… Would this work?   If you think this is too good to be true, read on…..

A great high yield safe investment comes in the form of a fixed annuity from a highly rated insurance company.  Insurance companies take in premiums and make investments, but you enjoy one major advantage in an annuity over a bank CD- …..  Tax deferred appreciation on your investment.

Insurance contracts, such as fixed annuities, offer competitive rates and tax deferred appreciation of investment gains, yet give up very little to a risk premium associated with most other investments.    The biggest tradeoff is usually liquidity- access to your funds.

Financially strong insurance companies have very small leverage ratios in comparison to banks, so in addition to stringent state regulation, these companies suffer much lower default risk than banks.  Also, state insurance guaranty funds back deposits up to $100,000 in most states.

Returns on fixed annuity contracts can exceed 5.5% in many cases with companies that have superior financial strength.  Plus, when you calculate that annuities enable investors to defer taxes and have the interest compound over time, you realize these are powerful tools.

For a complete primer on annuities, be sure to read  The Annuity Report and refer to the Annuity vs. CD comparison section for more information.

Also remember, to reach comparable safety with government backed notes of any kind, it is essential that you place your business with only the best financial institutions.  We give all the tools to select only the best companies in The Annuity Report .

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Want the Straight Talk? No, we don’t think they are.

Want to know why?

The premise of an equity index annuity is attractive- it is promoted as a high yield safe investment. But skilled salespeople can make anything look good by highlighting the best possible scenario and glossing over the worst case.  In reality, equity index annuities expose investors to market risks while simultaneously capping appreciation and imposing high fees.

Fundamentally, equity index annuities link the annuity appreciation rate of the annuity account balance to a stock market index.  Seems like a good idea, right? Eliminate the cost of managing a mutual fund in your sub-account and you should produce better returns by simply tracking the market, right?

Well, what is rarely explained is how the annuity return is calculated.  Insurance costs, dividend exclusions, surrender charges, maximum gain caps…. These and a host of other confusing riders, exclusions and contract loopholes usually leave an equity indexed annuity owner unhappy.

To understand the 5 critical components of picking an annuity, get our Report . You will learn the motivations of the company and the agent involved in the transaction, and protect your interests.

Some of the risks with Equity Indexed Annuities are:

	Long surrender charges, even charges that survive the life of the annuity holder and are assessed to the heirs!
	Two-tiered products which force the holder to annuitize their account balance to get even the guaranteed minimum rate.  In other words, the guarantees and floor returns are only valid if you convert your equity indexed annuity at the end of the deferral period into an annuity payment stream, otherwise you’re only entitled to your paid in premiums with 0% gains.
	Dividend exclusion: Many companies remove dividends from their calculation of the index return.  Excluding dividends takes 2-4% off the equity index annually!
	Index appreciation rate caps- many companies cap your appreciation rate, even if the index does much better.
	Timing- when index returns are calculated can have a dramatic effect on the return.
	Surrender fees as high as 10%,
	Surrender schedules 12 years or more
	Agent commissions of 7 to 10% of the annuity amount
	These and other red flags indicate that most equity indexed annuity products are marketed with using greed over logic, and promote what pays the agent and the company the most, as opposed to providing a product that is right for the customer.  Be Wary!

So what is a retirement saver to do? What else is out there that is safe, offers guarantees, and has a good yield? Simple- consider Fixed Annuities.

Fixed annuities are not as glamorous or in favor, but they are simpler products, their returns are much safer, and their risks much lower.  Why aren’t they promoted as often? Find out in The Annuity Report .

Always be aware of the interests of the other people at the table with YOUR money!